Archive for ND&S Updates

Weekly Commentary: Jackson Hole

August 27, 2012 


Last week stocks took a step back, the first after several continuous weekly gains. The Dow Jones was down 0.9%; the Nasdaq, down 0.2%; and the Russell 2000, down 1.3%. Economic data has been mixed lately with housing being the bright spot. New home sales improved in July, by 3.6%, to an annual rate of 372,000. July’s existing home sales also posted a 2.3% increase to a 4.47 million annual rate.

Later this week and weekend will be the Jackson Hole Economic Symposium. This is an annual forum for central bankers, policy experts and academics to come together to focus on emerging economic issues and trends faced by the U.S. and world economies. The market is focusing on Ben Bernanke’s upcoming comments around additional forms of quantitative easing. Click here to see a more detailed overview from

 “It’s the price of leadership to do the thing you believe has to be done at the time it must be done.”
-Lyndon B. Johnson

Weekly Commentary: The Pause That Refreshes?

August 20, 2012 


The stock market has now rallied off the lows in June by about 11%.  Thus it seems incumbent for the prudent investor to consider the near term market direction.  We would conclude that a correction could occur, but that the overall environment remains healthy.  Sentiment and valuation measures support current levels.  However, the slowing level of economic activity and the historically high margins for most companies reduce our enthusiasm.  In addition, September has the honor of being the worst performing month on average over the last sixty years.

The preponderance of evidence does argue for better days ahead. However, the major longer term issues can weigh on investors.  The Middle East uncertainty, European sovereign debt concerns, and the so-called “fiscal cliff” here at home, cause concern.  Particularly worrisome is the “fiscal cliff”- potential tax increases and spending cuts would produce a serious slowdown in 2013.  Congress and the President must get their acts together by year end.

We continue to prefer an investment strategy that focuses on high-paying dividend companies that grow their dividends yearly.  They continue to look attractive versus the fixed income market.

“We can’t solve problems by using the same kind of thinking we used when we created them.”
“You have to learn the rules of the game. And then you have to play better than anyone else.”

-Albert Einstein

Weekly Commentary: Subpar Growth

August 13, 2012 


Equity markets continued their advance again last week with the S&P 500 gaining 1%. This was the fifth consecutive weekly increase. Interest rates, however, moved higher with the 10 year U.S. treasury rate rising to 1.65% from a recent low of 1.40%. Last week saw further evidence of a slowing global economy with reports from China of a drop in their trade surplus for the month of July from $31.7 billion to $25.1 billion.

This week Germany, France, and the Eurozone as a whole, will report GDP figures for the second quarter. These reports should confirm a slowdown/recession in Europe. In the U.S., we will get reports on retail sales on Tuesday and CPI on Wednesday. Retail sales which had declined for the last 3 months are expected to show an increase of 0.3%.

CPI, which was unchanged in June, is anticipated to be up 0.2%. Inflation, which has been relatively tame, may come under some pressure in the near term as gasoline prices have increased sharply. The U.S. economy should continue to struggle with subpar growth.

“If you only do what you can do- you never do very much.”
-Tom Krause

Weekly Commentary: Jobs

August 7, 2012 


The market was flat to down for most of the week, but a 1.9% advance Friday enabled the S&P to finish the week up 0.4%. Despite Europe [the ECB’s Mario Draghi is procrastinating], the Middle East [Syria, Egypt, Iran etc.], and the vicious US political campaign, the S&P 500 has advanced by 10.6% so far this year.  The July employment report has been given much of the credit for Friday’s stock market advance, since the 163,000 nonfarm jobs increase, which normally is nothing to write home about, nicely exceeding estimates of ~100,000 and three previous months of sub 100,000 reports.

This BLS report was a big surprise, since other recent economic data have been cautious:  For example, the ISM’s business activity index is below 50 [indicating contraction!] for the second month in a row. However, skeptical analysts point out that the jobs number is inflated by an above average seasonal adjustment of 377,000 jobs [82,000 above the 10 year average. Also, the birth/death model [don’t ask] chipped in 52,000 additions.  Of course, the big picture is that at this point of a normal recovery, payrolls   should be growing by ~200,000/month.

Earnings season is coming to a close. 80%+ of the S&P 500 companies have now reported better than expected quarterly earnings, but more than 55% fell short on their revenue line, and most are issuing cautious guidance.  This week will see the final large week of reports, with over 500 companies checking in.  Stay tuned.

“I can see clearly now, the rain is gone. I can see all obstacles in my way.”
-Johnny Nash