Oct. 27, 2008
As we wait for indications that the bottoming process is working through, we had another bad week. The Dow fell 473 points over the week ended last Friday, more than erasing the 401 point gain the prior week. And international equity markets started out this week badly, with Hong Kong’s Hang Seng equity index down 12.6%, Japan’s NIKKEI 225 index down 6.4%, the FTSE index down 1.7% and so on. Emerging Markets have really been hammered, especially equity markets in countries that have a heavy reliance on energy, materials, or precious metals production and sales. In Brazil, for example, the Bovespa stock index fell 6.5% and is down 64% in dollar terms so far this year. <Read Full Article>
Oct. 23, 2008
Equity markets around the world continue to experience high volatility as investors deal with a great deal of uncertainty about just about everything. Although we still face a long list of unanswered questions, volatile markets, and yes, a recession, some of the right answers are starting to come in. <Read Full Article>
October 16, 2008
On Tuesday and Wednesday we gave up much of the ground we gained on the Monday rally in U.S. equity markets. Then today, after being up and down, U.S. equity markets closed higher, with the Dow up 401 points. This high volatility reflects a whole host of concerns. Markets are worried about whether the government rescue plan will work, how deep the recession will be, a continued "freeze" in interbank lending, arcane but very serious issues involving "credit default swaps", concerns that hedge funds may blow up, and on and on. On the other hand, I think many stocks are looking cheap, attracting buyers. I expect markets will remain volatile for some time. I hope we have seen the low but, of course, have no way to know. <Read Full Article>
October 13, 2008
Last week was awful, bad enough to push governments around the world into action against the underlying drivers of the financial panic that caused global financial markets to just plain crash. And today we’re seeing the markets around the world respond to these government efforts with sizable rebounds. <Read Full Article>
September 29, 2008
At the risk of offering too many communications, I want to keep you informed during these very turbulent weeks. Last Thursday night, Washington Mutual failed. Despite this being, by far, the largest U.S. bank failure, JPMorgan Chase took over their operations, assets and deposits immediately and with surprising smoothness. Depositors and customers should be fine. However, Washington Mutual equity holders were wiped out, and debt holders will likely get little return of their investment. Today, the FDIC announced that Citigroup was immediately taking over the commercial and investment banking operations of Wachovia in a complex transaction. <Read Full Article>
September 15, 2008
The events of this last weekend represent a major step towards resolution of the financial market crisis. Another big investment bank, Lehman Brothers, failed. Also, Merrill Lynch agreed to be acquired by Bank of America. This comes on the heels of the failures of Fannie Mae and Freddie Mac. And it is by no means clear that the bad news and instability of financial institutions is over. In my view the problems are not due to widespread instability in the credit markets. <Read Full Article>
September 8, 2008
Along with the end of this summer, the markets also are poised to enter a new season. The three months ended August 31 were pretty tough for financial markets, driven by continuing effects from the meltdown in the Financial sector, high energy prices and fears of recession. So far in September it has been more of the same, with the stock market down and economic indicators mixed—employment down, consumers cutting back, but factory orders and shipments strong. < Read Full Article >
August 8, 2008
Well, we got through a lot of data on the economy and a slew of company earnings over the last two weeks. And the stock market also stabilized with the S&P 500 Index unchanged! Looking at the data, the "glass is half empty" crowd note the rise to a 5.7% unemployment rate in July, the seventh month in a row of declines, albeit small declines, in payroll employment, revisions that now show a 0.2% decline in fourth quarter 2007 GDP, and a "weaker than expected" rise of 1.9% in second quarter GDP. < Read Full Article >
