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.