Blog

22 Jun 2007

Posted at 13:26h in The Friday Brief by
Once again the big unregulated hedge funds are roiling the markets. Stocks and bonds have been down over the last couple of days on concern that hedge fund losses at Bear Stearns may signal wider problems in credit markets, particularly the sub-prime mortgage markets. The two hedge funds’ speculation in sub-prime collateralized debt obligations has threatened collapse as creditors including Merrill Lynch, Bank of America, and Citigroup moved to sell some of their collateral at fire sale prices.

15 Jun 2007

Posted at 13:35h in The Friday Brief by
Today’s buying strength brings stock indices close to their all-time highs. The S&P and Dow are pennies away while the NASDAQ has blow considerably past its seven year high. In all the indices dropped between 3 ½% and 4% starting on June 5th. On that day inflation fears rocketed long term interest rates to three-year highs. The good news today is that an important measure of consumer price inflation increased less than predicted. The index which excludes food and fuel rose only 0.1% last month following a 0.2% rise in April. The measure which includes gasoline was up .7% for the month. The good news so far is that rising energy prices have not been passed along by producers to consumers.

08 Jun 2007

Posted at 13:46h in The Friday Brief by
Sailing downwind can be very tricky; certainly not as easy as it looks. A slight shift in the wind can send the mainsail boom sweeping across the boat with terrific speed and force. An alert skipper or crewmember who sees the sail flatten abruptly yells the warning  jibe which means to duck or find yourself in the drink with a knot on your head.

01 Jun 2007

Posted at 14:14h in The Friday Brief by
Have they executed a perfect landing by slowing the economy just long enough to wring out inflation while keeping growth alive? After slowing steadily for the last four quarters, the economy is giving strong signs that it may be back on a growth track. Today’s report from the Labor Department shows that employers added 157,000 jobs in May. It demonstrates that employers are optimistic about their businesses and it makes consumers feel better about their own jobs. Another report showed that personal spending rose in April by .5% following a .4% increase in March. Corporate earnings from S&P 500 companies gained 11.6% in the first quarter, which is three times more than analysts' estimates at the start of the reporting season. As the data shows an economy resuming healthy growth, inflation remains tame.

25 May 2007

Posted at 14:31h in The Friday Brief by
Yesterday’s new home sales report surprised everyone as sales surged 16% in April, the biggest jump in 14 years. The news sent stocks surging higher with the Dow up 100 points before traders took a broader, dimmer view sending the Dow down 85 points, the S&P down 1% (short of its record yet again), and the NASDAQ down 1.5%. The S&P 500 and the Dow may end their seven-week gain streak with this week’s decline of 1% so far. The bond market has retreated for two weeks as yields have marched steadily higher.

18 May 2007

Posted at 14:34h in The Friday Brief by
Despite another week of lackluster news from the economy, the S&P 500 and the Dow Jones Industrial Average are headed for their seventh straight week of gains. The Dow has declined only 5 days out of the last 30. Record takeovers so far this year are steadily driving stock prices higher. Today’s prices are up on two more takeovers and a surprise increase in consumer confidence. The Reuters/University ofMichigan's preliminary index of sentiment rose to 88.7% this month from 87.1% in April. It was the first increase in four months as strength in the labor and stock markets overcame record gasoline prices.

11 May 2007

Posted at 14:42h in The Friday Brief by
The bulls of the Dow Jones Industrial Index took a deep breath yesterday with a 147 point gasp. But it was a rare one. Over the last 28 trading days, including all of April and May so far, the index declined only four days. If today’s trend continues, the Dow will close up enough for a flat finish for the week saving the five-week streak. Mega corporate buyouts, potential for a Fed rate cut, reasonable stock valuations and old fashioned-momentum are propelling the averages.

04 May 2007

Posted at 14:44h in The Friday Brief by
One of the last holdouts in the slowing economy story – employment - has now fallen in line.USjobs grew at its slowest pace in more than two years last month, according to the government. And almost all of the gains came from health care and government while the job losses spread beyond homebuilders and manufacturers. Unemployment rose slightly as well from 4.4% to 4.5%. The good news is that inflation pressure from wages appears to be on the decline. Workers' average hourly earnings rose just 0.2% after a 0.3% increase in March. Earnings were up 3.7% from April of last year. Easing inflation will give the Fed more room to loosen the money supply if needed to boost economic growth.

27 Apr 2007

Posted at 14:51h in The Friday Brief by
The government reported today thatU.S.gross domestic product increased at a 1.3% annual rate in the first quarter, which is the weakest since the first quarter of 2003, following the recession of 2002. The report will be revised in each of the next two months, but it shows some worrisome trends. Home construction continued to decline and the trade deficit grew. Inflation gauges in the report surged to their highest since 1991.

20 Apr 2007

Posted at 14:53h in The Friday Brief by
Equal Parts Capital, Free Trade, Information, Oil, and a Dose of Cooperation to Hold It All Together What is the greatest threat to the world economy? Is it a slowing US economy, inflation, protectionism ,China’s explosive and unchecked growth, a financial or liquidity crisis, global warming, terrorism, or energy? While any one of these and certainly any combination could cripple the unprecedented economic advances we enjoy today, the great barometers, the stock and bond markets remain relatively unfazed.