20 Feb 2009

Posted at 14:13h in The Friday Brief by

"Those who cannot remember the past are condemned to repeat it."George Santayana, in The Life of Reason 

“Common sense is very uncommon.” Horace Greeley

There seems to be a sense in Washington in this time of crisis that the rules of ordinary behavior of most any kind simply don’t apply. Whether observing economic behavior, spending behavior, fiscal behavior, monetary behavior, political behavior, or what used to be generally acceptable and responsible behavior, it’s all up for grabs these days. Didn’t we get into this mess by abandoning the ordinary rules of lending and of borrowing and regulating?

30 Jan 2009

Posted at 14:48h in The Friday Brief by
There’s an old market axiom that says as goes January, so goes the market. As this one draws to a close we find the S&P 500 down 7.5% as the economy’s descent continues. According to Commerce this morning, the economy contracted at a 3.8% annualized rate in the fourth quarter. If the inventory buildup which occurred in the fourth quarter is excluded, the economy actually contracted 5.1%, the worst in 28 years. As reported, it is the worst since 1982. The economy shrank at a 0.5% annual rate from July through September. The back-to-back contraction is the first since 1991. For all of 2008, the economy expanded 1.3% helped by exports and government tax rebates in the first half of the year. The GDP report is the first for the quarter and will be revised in February and March as more information becomes available.

16 Jan 2009

Posted at 15:41h in The Friday Brief by
New revelations about the weakness of America’s banks have kept the pressure on stocks. The S&P 500 is down 5.2% at the moment but remains 14% above the market’s low reached November 20, 2008. A major reason stocks are holding up in the face of relentless economic news is their yield. Dividends paid on S&P 500 stocks are roughly 3.5%, which compare very favorably to the 10-year Treasury yield of 2.4%. Stocks are also up on investors’ high hopes for Obama’s economic team and their ultimate stimulus package.

14 Apr 2008

Posted at 16:05h in The Friday Brief by
Government to the rescue is becoming more widely accepted and even encouraged by Wall Street lately. The credit crisis hit another crescendo today as the nation’s fifth largest broker, Bear Stearns, obtained emergency funding from J.P. Morgan Chase and the New York Federal Reserve saying its cash position had “significantly deteriorated.” Traders in global currency markets are openly speculating that central banks will soon announce a concerted effort to support the value of the dollar. Earlier in the week central banks announced a concerted plan to buy troubled mortgages. On the heels of that news Ben Bernanke announced plans to lend up to $200 billion in Treasury securities in exchange for debt including private mortgage-backed securities that have slumped in value as homeowners defaulted on their payments.