Blog

10 Sep 2010

Posted at 16:36h in The Friday Brief by
Whatever economists ultimately label this period in American history, no doubt fear will play a large part in their description of it. Confidence numbers among consumers, investors, voters, and businesses hit all-time lows in 2008 and are only gradually coming back. The declines in economic indicators this summer sparked new fears, including a return to recession, even deflation. The new wave of trepidation drove many investors out of stocks once again and back into the short-term safety of money markets and short Treasuries.

03 Sep 2010

Posted at 16:42h in The Friday Brief by
Political strategist James Carville won the election for Bill Clinton when he turned the campaign’s focus toward the economy to unseat President George H. W. Bush who was considered unbeatable because of his successful foreign policy. An article in the Capital Journal Section of today’s Wall Street Journal by Gerald Seib sums up the problem facing not only the Democratic party this election cycle but the economy in general. “Fact One: The unemployment rate is the most important of all leading political indicators. Fact Two: If the August unemployment number to be announced Friday tops 9% [it increased from 9.5% to 9.6% last month] the jobless rate will have been above that level for 16 straight months. Already, the U.S. is mired in the longest such stretch of 9%-plus joblessness in more than a quarter of a century.”

13 Aug 2010

Posted at 14:48h in The Friday Brief by
The 10% rally in the S&P 500 beginning in early July abruptly turned this past Tuesday as the Fed announced a small downgrade in their assessment of the recovery and as a Chinese government report suggested growth was slowing in that economy. The US recovery has been largely attributed to exports which will decline if China and the global economy drift back into recession. The three-day decline in stock prices this week erased 3.8% from the 10% rally. Treasuries on the other hand continued their multi-month advance as the Fed said they would replace maturing mortgage bonds held on their books with two to ten-year Treasury bonds. The Barclay’s 7-10 year Treasury index is up 3% since early July. 

06 Aug 2010

Posted at 14:58h in The Friday Brief by
The Great Recession, now in its 33rd month, drags on relentlessly and painfully as headlines such as today’s unemployment number perpetuate the gloom. The US economy lost more jobs in July than was expected and the unemployment rate remained fixed at 9.5%. But beneath the din, there are substantial reasons for hope of improvement.

23 Jul 2010

Posted at 15:03h in The Friday Brief by
The combination of strong earnings reports and guidance from giants like Alcoa, Intel, Microsoft, Ford, UPS, 3M along with better-than-expected economic data in Europe cheered equity investors this week. Despite the enactment of sweeping economic reform legislation, potential tax hikes promised by the White House and comments from Fed chief Ben Bernanke that “the economic outlook remains unusually uncertain” the rally continued. 

09 Jul 2010

Posted at 15:19h in The Friday Brief by
Economic data reported during this holiday-shortened week was particularly light; perhaps facilitating the market’s rebound of 4.5%. Global markets rebounded as well as investors realized the world’s economy was not cliff-bound. Europe’s credit implosion has dampened growth, but evidence so far indicates it will not stall the recovery.

02 Jul 2010

Posted at 15:39h in The Friday Brief by
Paul Krugman in a column in Monday’s New York Times shook up the financial press and investors alike with his claims that “The Third Depression” may be upon us because of the “triumph of orthodoxy” evidenced in the G20’s endorsement of deficit reduction. Krugman a liberal economist and staunch Keynesian believes that government stimulus is the only way to create jobs, and that belt-tightening at this time would be disastrous. Unfortunately, the bond and stock markets seem reflect a similar fear at present with the benchmark 10-year Treasury at just over 3%, a level not seen since April 27, 2009, and the S&P 500 Index sliding to a nine-month low yesterday.

25 Jun 2010

Posted at 15:47h in The Friday Brief by
The ‘green shoots’ of economic recovery characterized by Ben Bernanke in mid 2009 are withering as the housing slump drags on, unemployment remains chronically high, consumer spending remains stagnate, Europe’s debt crisis eludes resolution, state governments grow increasingly insolvent, and the economic and ecological catastrophe in the Gulf grows worse by the day. For the second time, the government revised downward their estimate of US gross domestic product from to 2.7%. The first estimate was 3.2%, followed by a correction to 3.0%. Year over year real GDF (inflation adjusted) is up 2.4%, compared to up .1% for the fourth quarter.

18 Jun 2010

Posted at 16:04h in The Friday Brief by
There are plenty of stories of how smart or lucky investors made millions of dollars through unique investment ideas, schemes, or methodologies. There are indeed still billions, even trillions to be made by those who make large gambles and bets. Our purpose is not to suggest that the pursuit of market-beating returns does not have its place. There are indeed many investors with talents, knowledge, and acumen to do so. Rather it is our purpose to demonstrate that the performance pursuit is unnecessary and even dangerous for any investor with more important goals; such as educating children, retiring comfortably, or funding scholarships, grants, or buildings.