In closing my last post my suggestion was to not panic, keep cool and read a good book. Well I have taken my own advice and I see that I have not missed much other than a 3% plus loss in the 3 major indices last week. The market has been flat out complacent and  boring pretty much across the board . My expectations is for this type of action to continue until after Labor Day, however when the markets do trade thinly like this any significant headline event could wake it up and create some opportunities. This period also presents the opportunity to reassess investing and trading strategies as the end of the year approaches. Good luck to all.

Have a relaxing week.

~George

Okay days like today can be hard to watch and swallow, tomorrow morning will be no better, note the keyword morning. All of today’s headlines were negative including the fed citing a slowdown but committing to incessant liquidity buy buying government debt,  the Bank of England echoing a similar sentiment and reports out of China showing slower industrial output. Holy cow no wonder the sky was falling today! Is this a surprise? Does anyone out there expect rapid growth or any real growth over the coming months or year for that matter? This perma bull doesn’t. In fact until there is pro business growth policies with conviction coming out of D.C.  don’t expect too much from the private sector.  With all of the real economic issues going on and the dire economic reports coming out and then the press pouncing on it, ensuing panic kicks in, hence todays market action.

In my experience when the sky is falling and panic sets in, you do the opposite. Do not get caught up in the hype of the world is coming to an end, just like you shouldn’t get caught up in the hype when the markets seem like they can go up forever. Point being, whenever I have allowed my emotions to run the show and follow the herd mentality, wrong decisions were made. We are in the dog days of August, this type of market action can happen in the dogs days of August. Not saying I like it, but cooler heads most always prevail. For me the real test will come after Labor Day and as we head into mid-term elections, so until then read a good book and keep cool 🙂

All the best.

~George

Friday’s unemployment numbers once again showed that companies were slow to hire with private employers only adding a net total of 71,000 jobs in the month of July. That’s not even close to lowering the unemployment rate yet after the jobs report was released on Friday morning and the markets subsequently tumbled, the Dow, Nasdaq and S&P came way off their lows of the day to close modestly lower. Nothing seems to be able to keep these markets down and over the past few months when the markets do correct, they are met with tremendous support. However, there is no question in my mind that at some point meaningful  job growth is going to have to occur in order to sustain not only the market support that currently exists, but any future real upside that we all want to see.

U.S. companies have $1.8 trillion on their balance sheets, so what is needed for them to begin to feel confident about expanding their businesses and payrolls? Well that’s a loaded question. I have to believe that until Corporate America can understand the regualtory and tax situations out of Washington, they will not have confidence in this current economy. Somebody is going to have to reach these business leaders and provide to them compelling reasons on why they should begin to invest in expansion and jobs. That’s not going to happen until there are concrete policies out of Washington and what a coup it would be if the Bush tax cuts were extended. I can’t wait to see how the upcoming mid-term elections pan out, for that my friends could provide the necessary means to get this country moving again.

Have a great week.

~George

Manufacturing reports out earlier in the week gave stocks the launching pad to close yesterday at 2+ month highs. Seemingly manufacturing activity came in better than expected here in the U.S. and in the 16 countries that use the Euro indicating a faster recovery than expected. I think though it is important not to get too caught up in the weekly or for that matter the monthly data, for what this perma-bull wants to see is at least quarterly evidence that this economy and the economies abroad begin to experience consistent expansion across the board. This rings especially true with the employment data. Let’s see what the job numbers look like not only tomorrow, but for the rest of the year, for this to me my friends is the biggest factor of them all.

Best of luck.

~George

The Dow, Nasdaq and S&P 500 all posted approximately 7% gains for the month of July, very impressive right? Let’s look a little deeper. With approximately 70% of companies in the S&P 500 having reported their earnings so far, on average top line sales growth came in around 9% even though earnings are running at a much higher rate than a year ago. It appears that companies are continuing to run their businesses more efficiently via layoffs, cost cutting measures, productivity and the like. So the earnings growth in which the markets are embracing is not really coming from sales growth which we have to pay attention to. To me this means that the consumer remains tepid and in my humble opinion in order for the markets to continue to march north in a meaningfully consistent way, consumers must become more confident and that will only happen when there is real job growth.

There is a lot of work that needs to be done in this economy and job market, but in the meantime companies will have to continue to run more efficiently and the interest rate environment we find ourselves in will have to remain friendly in order to keep a floor in on this fragile market. Let’s hope that these scenarios will buy enough time for the job market to improve, hence companies should then begin to realize top-line growth and the markets can continue northward.

Have a great week.

~George

And I am not just talking about the U.S. heatwave that has affected most of the country. The U.S. markets were on fire in July with all three major indices closing out the month up approximately 7%!! That’s for the month!! Unbelievable and that’s in the midst of a declining GDP, go figure. This has been one of the strangest and most counterintuitive markets I have ever seen. You are taught that markets are always forward looking and if this resiliency keeps up then 2011 and 2012 could become stellar years for equities. I have thought all along that the interest rate environment we find ourselves in is very bullish for the markets and just maybe this is the key component for the floor that seemingly has been put in.

I am very interested to see the July jobs report at the end of next week, for any slight signs of improvement could only add fuel to this hot market.

Have a great weekend.

~George

Once again a market not for the faint of heart. Just when it looked like we were heading below 10,000 the Dow raced back up over 10,400 on Friday. You can thank earnings, you can thank the European banks for the most part passing their stress tests, you can thank the market technicals or you can simply thank the fact that we still remain in an interest rate environment that is simply bullish for the markets. I continue to believe that the latter is the main culprit for the recent market floor. We have pulled back below 10,000 multiple times over the past few months only to be met with tremendous support and subsequently race back above 10,000. When treasuries, money markets and C.D.’s continue to yield next to nothing, where else can the $trillions of global dollars that are sitting on the sidelines go? With all of the uncertainty that still exists in the global economies and with continuing high unemployment,  you ask how can the stock markets continue to be so resilient?

Well there are companies that are knocking it out of the park, so yes certain earnings are contributing to the market behavior and yes technically speaking it looks like the 200 day moving averages are being threatened to the upside, however as long as yields remain at historic lows I believe we will continue to see impressive support on pullbacks in this very volatile market.

Have a great week.

~George

Up to this point the 2nd quarter earnings reporting season has been coming in mixed  with companies like Intel and Apple having their best quarters ever and yet other companies such as Bank of America and Citi struggling through this unusual cycle. Then you have the Fed chairman coming out yesterday proclaiming uncertainty in the economy in his semi-annual report to Congress. Not the events you want to see unfold if you are hoping for stability in a market that has been exceptionally volatile over the past few months. Well it looks like the mid-term elections are needed for the “catalyst” that could take these markets out of its recent uncertainty with the hopes that new blood can begin to take this economy and country in a much needed better direction. Until then lets see how earnings season wraps up over the coming weeks and look forward to new beginnings in the fall

Sincerely,

~George

The markets got slammed today from an unconfident consumer and bank profit woes from two of the majors. This was the recipe for the sell-off and the continuation of the extreme volatility that we have witnessed since early May. In my previous posts and today, this type of volatility continues to be my concern and it can very unnerving for any investor except for the day trader which for them this market is a dream. Just last week the Dow, Nasdaq and S&P 500 rose over 5% and the rally continued this week until today. I think we can all expect more volatility ahead especially as more companies report their 2nd quarter results. So let’s fasten our seat belts and see what next week brings.

Have a great weekend.

~George

The markets continue their torrid pace and why not with Intel reporting their best quarter in their history. This should bold well for the other tech titans such as IBM, Hewlett-Packard and Dell. The markets were telling us something last week when it surged over 5% in just 4 days. I would like to see other sectors such as the retail and energy space demonstrate such an earnings punch for then we can begin to see a much broader recovery in the works. Keep in mind the upcoming mid-term elections could be the 2nd catalyst that lifts these markets further. I will try not to get too excited yet for there are still several macro economic concerns to contend with, however let’s embrace what is in front of us and hope to continue to see corporate strength and begin to see some meaningful job growth.

All the best.

~George