04 Feb 2011

Posted at 15:33h in The Friday Brief by
The flurry of economic data released this week was on balance surprisingly strong, with the notable and regrettable exceptions of jobs and housing. Fed Chair Ben Bernanke summed up the economic outlook yesterday. “Until we see a sustained period of stronger job creation, we cannot consider the recovery to be truly established.” Yet almost every other metric is strong and getting stronger. Quarterly corporate profits are sharply ahead of a year ago, manufacturing is growing stronger, productivity continues to rise, and consumer spending as evidenced by retail sales is gaining strength.

28 Jan 2011

Posted at 15:36h in The Friday Brief by
Common sense as defined in the Encarta Dictionary is “sound practical judgment derived from experience rather than study.” In his 1776 treatise Common Sense, Thomas Paine used plain language to speak to the common man and woman in America challenging the authority of the royal monarchy over them. For the next few minutes, to the extent possible, try to suspend influences that pull you away from common sense thinking; such as politics, media, and persuasive speakers. 

12 Jan 2011

Posted at 15:38h in The Friday Brief by
Since stocks turned sharply up last September, they have been on a steady rise, with one notable 4% exception during the month of November. Economic news, both at home and abroad, has steadily improved, but not enough to explain the strength and duration of the rally. Likely much of the buying strength is coming as bondholders cash in profits and head for equities. About the same time stocks began rising, bonds began a steep descent on hyped up inflation worries with the 7-10 year Treasury index losing roughly 6%. More recently, domestic stocks have also benefitted from rising international, particularly emerging market inflation. As central bankers in the fast growing economies of China, Russia, and Brazil raise rates to control speculation, stocks in those countries look less favorable than in the US where rates are being held near zero by the Fed. 

07 Jan 2011

Posted at 15:42h in The Friday Brief by
The economy is coming back according to stocks, bonds, gold, economic reports, and Mr. Bernanke. The S&P 500 gained 13% in 2010 and 1.4% so far this year. Companies are poised to report strong earnings for the fourth quarter with profits for S&P 500 companies expected to be up about 20%. Unfortunately, unemployment is not yet following suit, despite the unexpected drop in the headline number.