Third Quarter 2010 Newsletter

Summary-

The US Economy is in the midst of a shaky hand off between the end of government stimulus spending and private sector’s slow growth. We expect this hand off will ultimately be successful, but anticipate a few more scares over the next 6-9 months that will provide additional market dips to be taken advantage of. Continued above average corporate spending should finally provide some much needed solid labor market gains by year-end. We expect low growth and low inflation in developed countries, and higher growth and higher inflation in the important and cannot gain much ground until construction picks up in 2011/12. Continue reading →

Second Quarter 2010 Newsletter

Summary-

A growing sense that our economic recovery could be stronger than anticipated has lead the US Stock Market up, close to our year-end target of 1225 on the S&P 500. Inflation continues to be mild and US businesses report better than expected profits due to near record productivity gains from a lean work force. Commercial real estate is finally following residential in a bounce from deeply depressed levels. However, the real growth continues to be in the BRIC countries (Brazil, Russia, India, and China) and Asia in general, as their internal consumption for Western goods and services grows. While we will have our short-term setbacks, we are experiencing a better than expected recovery which will lead to a healthy economy in a few years. Continue reading →

First Quarter 2010 Newsletter

Summary-

After the crash of ’08 and the vigorous rebound of ’09, we expect the economy and financial markets to spend most of 2010 moving sideways as they adjust to a slow “grind out” recovery. Jobs will be the key, as there can be little CPI inflation, rent growth, gain in consumer spending or main street improvements until unemployment is below 8% and falling. That is unlikely until well into 2011. Like the USC football team, it will be a building year, necessary before a healthy future economy can emerge. Continue reading →

Fourth Quarter 2009 Newsletter

U.S. Economy-

It has been a little over a year since the Wall Street/banking meltdown took what should have been a garden variety recession into a “second great depression” free fall. In retrospect, what happened? In addition to the
underlying toxic real estate loan problems, I believe two key factors put the “panic” into this recession: 1) banking problem transparency – high level, public discussions of potential nationalization, closures and fire sale mergers of large financial institutions became a self fulfilling prophecy. If you announce that a big bank could be under-capitalized if depositors withdraw their money, people will pull their money out and it will become undercapitalized…

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