Blog

18 Dec 2009

Posted at 15:41h in The Friday Brief by
Last week we discussed the possibility of a “W”-shaped recovery/recession. In such a scenario the economy rallies for a few quarters (two or three) then falls back into recession lacking sufficient momentum for recovery. Our economy started its growth trajectory surging 2.8% during the third quarter and is expected to continue growing for several months. The Conference Board released its index of leading economic indicators showing steady economic growth continuing into the new year. But the recovery is saddled with issues that will not quickly dissipate.

11 Dec 2009

Posted at 15:44h in The Friday Brief by
This week’s economic reports brought further evidence of economic recovery. The Commerce Department reported today that retailers saw a 1.3% increase in November sales. And it was privately reported that hiring by US discount, grocery, restaurant, and specialty chains in November rose to the highest level in 2009, signaling that retailers may be anticipating a gradual recovery in consumer spending. Consumers are still buying autos without government incentives. And manufacturers are especially optimistic as they look forward to 2010 sales growing by 5.74%, as reported by the Institute for Supply Management.

04 Dec 2009

Posted at 15:47h in The Friday Brief by
Today’s news that unemployment dropped from 10.2% to 10% indicates that the deepest recession since the 1930s may be over, says the head of the government agency responsible for officially calling recessions. “Today’s report makes it seem that the trough in employment will be around this month,” said Robert Hall, head of the National Bureau of Economic Research’s Business Cycle Dating Committee. “The trough in output was probably sometime in the summer. The committee will need to balance the midyear date for output against the end-of-year date for employment.”

27 Nov 2009

Posted at 15:56h in The Friday Brief by
For three weeks running the Dow has traded between 10,200 and 10,400. This week’s news was mostly positive with the Federal Reserve trimming its forecast for the jobless rate, home re-sales and new home sales rising, and consumer spending climbing more than forecast.

06 Nov 2009

Posted at 16:03h in The Friday Brief by
After falling 5.5% from its recent peak in mid-October the S&P 500 roared back this week with a near 3% rally. A steady flow of good news soothed recent worries that the recovery was growing anemic. Ford led the good news parade waving a banner quarter of almost a billion dollars in profits. Tool-maker Stanley Works agreed to buy Black & Decker for $4.5 billion and the next day Warren Buffett announced that he was in the railroad business with a $26 billion “all-in” bet on the US economy purchase of Burlington Northern. What was bad news for Mr. Obama and Democrats was good news for investors as Tuesday’s Republican victories suggested the possibility of future gridlock and perhaps some near-term restraint in big government growth and spending.

30 Oct 2009

Posted at 16:09h in The Friday Brief by
The US economy expanded in the third quarter, reversing a year-long contraction of 3.8% for the world’s largest economy. It was the worst economic performance in seven decades. As for duration, the four consecutive quarterly declines were the longest since quarterly records began in 1947. But in the third quarter, the economy came roaring back with a 3.5% gain, well ahead of the 3.2% median forecast of economists surveyed by Bloomberg news.

23 Oct 2009

Posted at 16:48h in Briefs about our Process, The Friday Brief by
There is a steady and dramatic shift occurring in the investment world toward Exchange Traded Funds. ETFs as they are called, represent baskets of stocks which are managed only to match specific indexes, not to beat them, as is the case for actively managed mutual funds. According to a recent study by Barclays Global Investors US listed ETFs climbed to an all-time high of $607 billion at the end of August. The study suggests that a "conservative" growth rate of 20% compounded annually, would put ETFs above $1 trillion by mid-2011. That total would represent 10% of the US mutual fund industry.  Brad Hintz, an analyst at Bernstein Research, in a Sept. 23rd research note said the growth of passive index products in general and ETFs in particular represent "a threat to traditional asset managers." He expects investors will focus even more on fees and tax efficiency with a sluggish outlook for stock and bond returns after the financial crisis. In this Brief I will demonstrate that there are even more significant advantages to the passive approach offered by ETFs than simply lower costs and taxes.

16 Oct 2009

Posted at 14:25h in The Friday Brief by
The US Economy continues to show signs of recovery, particularly in manufacturing. Third quarter earnings will show just how quick the pace of recovery is. Early reports this week were good with Goldman, JP Morgan, Citi, IBM, beating expectations and Intel raising fourth quarter guidance. The stock market continued its steady rise this week as reports filed in with the Dow closing about 10,000 yesterday for the first time in a year. And as has been the case since March, the dollar continues to decline as the stock market rises.

09 Oct 2009

Posted at 14:36h in The Friday Brief by
Economic recovery will be in the eyes of the beholder for months to come. From the perspective of employment, the economy may remain anemic for months. And Washington’s stimulus efforts are having no discernable impact. Alternatively, the corporate sector seems to be showing life on several fronts including exports, inventory replenishment, and earnings from increasing sales.

02 Oct 2009

Posted at 14:42h in The Friday Brief by
The long and mostly uninterrupted rally took a breather this week as investors wondered if the economic recovery might be losing steam. Some wonder if the market might be ahead of itself, given the anemic nature of the recovery. But it is not news that the recovery is going to be bumpy and uneven. The perennial doomsayers continue to harp on the bad and the perennial optimists harp on the good. Today, we’ll simply report the week’s economic news and let you decide.