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Market Update 03-02-10

The bifurcated economy continues to plod along. The manufacturing segment is doing fairly well thanks in large part to strong export demand, which has risen for seven consecutive months. The service sector, however, continues to struggle.Read more...

Market Update 02-23-10

After managing strong gains last week the action in stocks this week promised to be relatively quiet. Yesterday was true to form, kicking things off with one of the second-slowest trading days of the year so far—and one of the lightest non-holiday related days in quite some time.Read more...

Market Update 02-08-10

We’re watching the problems in the European Union unfold and can only speculate how far the contagion can spread. The credit market is increasingly betting on turmoil in the E.U. as the spreads between the countries running high budget deficits, such as Greece, Portugal and Spain, have widened dramatically in recent weeks against those of the more fiscally responsible nations like Germany and France.

The architects behind the E.U.’s monetary union failed to institute a mechanism for enforcing compliance with debt ceiling targets. So while the Greek delegation to Brussels promises the rest of the E.U. the country will behave itself, its track record, coupled with vocal political opposition at home raises serious doubts that any real progress will be made with its belt tightening.

The E.U. has relative few options at its disposal. On one hand, while Greece represents only 3 percent of the E.U.’s GDP, the country is on the hook to many banks across the continent. So simply booting it from euro-land, which would force Greece to bring back the drachma and precipitate a default on its debt, isn’t a palatable option.Read more...

Market Update 01-19-10

Short-Term Key: Negative Long-Term Key: -94 (Negative-to-Neutral)
The latest news from Europe confirms our long-term pessimistic view of the continent. Greece, the birthplace of democracy, has become a financial basket case on the verge of defaulting on its $360 billion worth of debt.
 
That's doesn't mean everyone who bought Greek bonds will be stiffed, but a default will have big consequences.
 
These days, there are those who try to put a positive spin on everything. One of the funniest comments on the situation we read this weekend came from a European Union official who stated that Greece's problems are not about to cause the break up of the EU since, after all, the EU has been around for 50 years.
 
Maybe he was trying to reassure people. However, 50 years is not a long time for any political union. It's less time than the Soviet Union held together.
Read more...

Market Update 12-08-09

Markets around the globe are under pressure today. Dubai World is once again the news behind the selling as the conglomerate enters talks with its primary creditors to renegotiate its debt payments ahead of its Nakheel subsidiary likely default next week. That could pose a problem for European banks that have outstanding loans in the emirate. But Dubai isn’t the only potential problem on traders’ radar right now.
 
Also in Europe, concerns are mounting that the EU will have to ride to the rescue of Greece, which is faced with towering debt and an anemic economy. Fitch, the credit agency, lowered its rating for the nation to BBB+, the third-lowest investment grade. Likewise, Standard & Poor’s has put Greece’s A- rating on watch for a possible downgrade.
 
Not to be outdone, Moody’s Investors Service, the other major ratings agency, has indicated that its top debt ratings for the U.S. and the U.K. may “test the Aaa boundaries” due to the weakening public finances.
 
With stocks under pressure, investors are returning to the safety of the U.S. dollar. While that’s good for bonds, we’re seeing additional selling in commodities such as crude oil and gold.
 
For crude, we’re nearing the 1-year anniversary of the bottom in the market.
Read more...

Mid-Week Update 11-04-09

Yesterday, Warren Buffett stormed back into the headlines with the largest deal in his 44-year career at the helm of Berkshire Hathaway. The “Oracle of Omaha” announced that he was buying the 77.4 percent of Burlington Northern Santa Fe that he didn’t already own – paying $26 billion or $100 per share of the railroad (a 30 percent premium over the previous day’s closing price), and assuming roughly $10 billion in Burlington debt. Including his previous holding in Burlington, this is a $44 billion investment for Mr. Buffett, and is quite a bet for the investment icon. Read more...

Weekly Update 09-28-09

Short-Term Key: Negative Long-Term Key: +2 (Neutral) 

A couple of economic statistics released last week suggest the economy may be growing more slowly than expected/hoped/prayed. These included a slowdown in housing and weaker durable goods orders (now that the cash for clunkers program has ended).Read more...

Market Update 08-31-09

Short-Term Key: Negative Long-Term Key: +35

If there's any lesson to be learned from Hollywood's fictional aliens, it's that they deserve to be treated with caution. If an alien wants to have you for dinner aboard his flying saucer, make sure you find out first whether you'll be the guest or the main course.

So today, while Newsweek speculates on the existence of extraterrestrial life and movie-goers enjoy films like District 9, we find ourselves shaking hands with another form of alien, while planning our escape route at the same time.

The alien in question is today's stock market, which seems so totally unlike any other in history that it may as well have beamed down from Mars. It's a UFO: an Unidentified Financial Obstacle.Read more...

Mid-Week Update 02-04-09

With his personal secu...

Image by Getty Images via Daylife

With apologies to our European and Asian readers, there are essentially just two currencies in the world today: the dollar and gold. Which one you invest in will have a lasting impact on your portfolio in the coming decade.                 

It’s no secret the U.S. government is gearing up to spend unprecedented sums to pull us out of the worst economic crisis since the Great Depression. And the Federal Reserve, after having firing off every round in its magazine (taking interest rates down to near zero), has signaled loud and clear that it’s prepared to go one step further: monetize the federal debt.  

As if the record jump in the nation’s money supply these past few months isn’t enough: the Fed stands at the ready to buy up Treasury bonds. While this may serve to keep interest rates down, monetizing our burgeoning debt is a sure-fire ticket to raging inflation, too.Read more...

Market Update 12-30-08

 As 2008 ends, it will go down in history as one of the worst years for stock markets. However, since the bottom in late November, the S&P has still rebounded over 15% and the Dow over 12% despite all the negative economic news that’s been released in the duration. We are becoming more optimistic that the gloomy immediate outlook for the economy has already been largely priced into the market.

We maintain our view that leadership from the housing sector is required for the markets to recover, and today’s action in housing stocks is encouraging as they continue to disregard bad news in the sector. In fact, the strength we are seeing in the group today indicates that the market is anticipating a recovery. Read more...

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