Finally some respite.

A welcomed sight to see on Friday with the markets closing in the green and near the highs of the day. Call it short covering, you can blame the technicals or you can thank Chairman Bernanke for his comments which seemingly helped boost the markets. Whatever the case may be, it was certainly needed. August can be a very tricky month for the markets and thank goodness we are heading into the last week of it. As we approach Labor Day weekend let’s hope for a quite, subdued week ahead and get ready for what should be one heck of a close out to the year. Who knows what to expect and where we will be on December 31st, 2010 but one thing is for sure Washington and the markets should look very different ūüôā

A great weekend to all.

~George

Can the headlines be any more gloomier?

Okay we get it, the economy and job markets are upside down right now but do you have to constantly drill it into our heads? Is it just me or is this overkill? “Housing plummets, debts are at all time highs, Dow Industrials fall to 7-week low, Europe is crashing, Sovereign wealth funds ¬†in trouble etc.” Look at these headlines, could you please¬†give us a break? Does anyone ever talk about how there are 145 million people employed in this country? Does anyone ever talk about how consumer debt levels are dropping at record rates? Does anyone ever talk about how lucky we are to continue to have our freedom and liberties? Historically when it’s this negative and noisy out there we are either in an election year or we are bottoming, just maybe it’s both this time.

People do yourselves a favor and don’t get caught up in the constant doom and gloom that is being fed to us and let’s count our blessings for what we do have.

Humbly yours,

~George

Despite deals, markets close lower for the week.

Merger activity up ticked this week however the markets continue to focus on the short term data especially the jobs numbers. People seem to be forgetting that we are coming out of the worst recession since the great depression and the economy and jobs market still have a long way to go. Being obsessed over the weekly economic reports that come out which is then exacerbated by the media, is a recipe for a very emotional and volatile market. It’s utterly important to recognize that the recovery and healing is going to take time and let’s hope that governments, corporations and individuals alike will learn from the extreme leveraging and risk behavior that put the world economies at the brink.

We have come a long way in a mere 18 months with a lot more work to do. In my humble opinion the real work will begin once the mid-term elections are complete. There are plenty opportunities now and more to come in the future, but one has to be very patient and diligent when considering to act.

Good luck to all.

~George

How’s the book coming along?

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

Try not to panic, cooler heads most always prevail…

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 ūüôā

All the best.

~George

Resilient markets continue amid anemic job growth.

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

Economic reports take the markets to 2 month highs. However buckle up for the unemployment report tomorrow.

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

Spectacular July, but where is the top-line growth?

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