Category: Portfolio Update

All week CNBC hyped Friday’s job numbers as the most important economic report of the year.  A weak number (~50K) would provide the ammunition for Fed Chairman Ben Bernanke to appease the market and cut interest rates.  A strong number (~120K) and he would continue singing his economy is fine tune. 

No one expected a negative print.  The non-farm payrolls showed a decline of 4000 jobs.  This was the first time the economy shed jobs since August 2003.  The market fell through the floor as the conversation moved from managing a financial crisis to concerns of a recession. 

Continue reading “Week in Review 9/7/07 – Jobs Fall Through the Floor”

If you were fully invested on July 31st and simply buried your head in the sand for the month August – the market rewarded you with a 1% return on your money.  Not bad for being oblivious to the turmoil that has been roiling the market since it peaked on July 19th.  The rest of us have been whipsawed like it is no tomorrow.  One hundred point down days on the DOW seem like moral victories.  That certainly beats the two and three hundred point down days that have become so common.

We were treated to another 280 point drubbing day on Tuesday.  The breaking news was consumer confidence dropped to its lowest reading in a year and housing prices showed its worse decline in 20 years.  However, before we could kick ourselves too hard – a letter on Wednesday from Federal Reserve Chairman Ben Bernanke stated  the Fed was “prepared to act as needed” to ensure credit market troubles would not adversely affect the economy.  That was good for +247 points on the DOW.  Are you getting sea sick yet?

Continue reading “Week in Review 8/31/07 – Believe It Or Not Market Up 1% in August”

As the Fed’s liquidity injections and cut in the discount rate have had a calming effect on the market, it appears as though the old play book – don’t fight the Fed is back in vogue. However, this is doesn’t feel like your normal run of the mill financial crisis and Bernanke is showing that he is no Greenspan.  Could we see this positive tape action fade quickly?  Tune in next week and let’s see.

At least last week, the markets performed as though the all clear signal has been blown. 
The DOW, S&P 500 and NASDAQ were up 2.3%, 2.3% and 2.9% respectively for the week.  Semiconductors were up 1.6%.

Continue reading “Week in Review 8/24/07 – Don’t Fight the Fed”

Two weeks ago the DOW closed up, but most didn’t feel good going into the weekend.  This week the DOW closed down and many feel renewed.  Go figure.  On Friday, the Fed cut the discount rate that it charges to banks by 50 basis points.  The DOW jumped 233 points on the news ending a six day losing streak.

The talking heads have been yapping about a 10% correction and the DOW finally accommodated them on Thursday. The DOW dropped 343 points, but finished the day almost flat.  Initially I thought the miracle recovery was simply program buying.  However, I wonder if insider news of a rate cut played a role. 

Whatever the reason – it appears as though the Fed is not going to let the market go into free-fall without a battle.  According to Jim Cramer, if the Fed hadn’t responded on Friday the market was setup to lose 1000 points over the next two days.  He might have been right.  The DOW Futures were down triple figures Friday morning before the move and Japan’s benchmark Nikkei closed down 5% .

Before getting too excited and start buying with both hands, keep this in mind. Continue reading “Week in Review 8/17/07 – Uncle Ben to the Rescue”

After being slapped around for 3 weeks, the market was overdue for a bounce. Monday, Tuesday and Wednesday were quite accommodating as the DOW rallied 286, 35 and 153 points.  Just as soon as we thought the water was safe, we were hit with a 380 point loss on Thursday.  The subprime mortgage fiasco that Fed Chairman Ben Bernanke and Treasury Secretary Hank Paulson so often said was contained reared its ugly head in a major French bank. 

Can you imagine wanting to redeem your money from a fund and being told not right now?  That’s what France’s largest bank, BNP Paribas, did.  It froze $2.2 billion worth of funds citing U.S subprime mortgage issues.  This was only a week after saying it would not be affected by US subprime loans. 

Continue reading “Week in Review 8/10/07 – Bernanke and Paulson Blew It”