Blog

02 Jul 2009

Posted at 16:48h in The Friday Brief by
Stocks posted their best quarter since 2003 as the second quarter came to an end. Stocks held on to the majority of their increase as the S&P 500-stock index finished the quarter up 15% and the year up 1.8%. As investors who missed the rally buy on dips, the vast majority feel the best is behind until the economy can prove it is up to expectations. The next big test is corporate profits for the second quarter which will be released in the coming weeks. They must match or beat analysts’ projections to sustain stock prices at current levels.

26 Jun 2009

Posted at 14:08h in The Friday Brief by
In the days of sailing ships one of a captain’s greatest fears was being becalmed in the Doldrums. Ships could be trapped for weeks without sign or hope of a breeze powerful or consistent enough to propel them safely out of the morass. These regions exist at the earth’s equator and are characterized by extreme low pressures, where the prevailing winds are calm and variable.

19 Jun 2009

Posted at 14:22h in The Friday Brief by
After trading in a narrow range from the beginning of June, stocks took a 3.7% dive on Monday and Tuesday as investors focused more on the disappointing economic news than on positive. However, the down days were on relatively light volume and there was little selling conviction evident.

12 Jun 2009

Posted at 15:27h in The Friday Brief by
Markets largely tracked sideways this week as investors weighed improving economic signs against concerns of rising interest rates, inflation, and a falling dollar. The Treasury successfully completed a record offering of debt including the reintroduction of the 30-year bond. Earlier this week Treasury announced that they would allow nine banks to repay their TARP money. The move reveals improved internal and regulator confidence in their stability. The money is also freed for other uses. Jobless claims, retail sales, and other economic reports continued trending more positive.

05 Jun 2009

Posted at 15:35h in The Friday Brief by
It can be argued that since September of 2008 the stock market has experienced two distinct bear markets; one starting in September 2008 and one starting February 10th 2009. It could also be argued that three-month 40% rally we now enjoy eliminates the second bear market leaving only the first to battle.  

29 May 2009

Posted at 15:40h in The Friday Brief by
As the world recession eases there is much talk of a “new normal,” in the global economy, characterized by heightened government regulation, slower growth, and a shrinking role for the US. Anyone familiar with the history of booms and busts hardly disagrees with the premise, especially given the extensive damage wrought on the worlds’ credit infrastructure, the breakdown of fundamental investor trusts by regulators who increasingly blur the lines between public and private rights, and a consumer who is too tapped-out, over-leveraged, and over-taxed to consume us out of this one.

22 May 2009

Posted at 15:49h in The Friday Brief by
Mounting concerns over unemployment, country-debt quality, and housing helped send the S&P 500 down 2.4% from Monday’s close, but the index remains .7% above last Friday’s close and more than 31% ahead of its low reached March 9th. A bit of cooling is inevitable as investors are perhaps a bit too far in front of the economic data; data which largely expresses ‘less bad’ news than truly good news on the recovery.

15 May 2009

Posted at 15:57h in The Friday Brief by
How investor outlook has improved since those dark days of early March. The S&P 500 remains 32% above its March 9th low despite recent announcements that Chrysler and GM are closing 789 and 1,000 of their dealerships, respectively. All signs suggest this is a confidence rally. The huge liquidity pumped into the global economies is driving short-term interest rates to levels that no longer hold any appeal for investors. They are fleeing the relative safety of short government bonds in pursuit of higher returns of higher risk instruments. With real estate down for the count, stocks and commodities represent the only game in town at the moment. Still some argue that the current rally is a trap, a bear market rally that will eventually falter. Our opinion is that the rally is a bit overdone, but it is for real.

08 May 2009

Posted at 16:20h in The Friday Brief by
Since the exaggerated stock market lows of early March, investors have been overjoyed by recent Good news that the trends in earnings, housing, jobs, and the economy may be slowing in their descent. They are glimmers of light in an otherwise dark reality. But this is a Bad Recession, the worst since the Great Depression, and it is unique in numerous ways. Finding remedies that don’t make matters worse poses hugely daunting challenges for government officials. And the Ugly truth is they have bent and even broken good faith promises, contracts, and even the Constitution in the name of remedy. The effects of these broken trusts, the exponential explosion of federal debt, and unprecedented spending on social programs that will not end after recovery will have major and unintended consequences on our future economy.

30 Apr 2009

Posted at 16:29h in The Friday Brief by
The S&P 500 index rose 10% in April, for its largest monthly increase since 2000, despite a steady stream of negative to mixed economic data. Its near-two-month rally has added 29% to the index’s value. The story was more mixed for bonds as short term rates fell and long term increased. But the clear message is that both the bond and stock markets are positioning for recovery. Even Thursday’s announcement that Gross Domestic Product fell by a whopping 6.1% had no significant impact on the markets.