By JAMES SWANSON, MFS Chief Investment Strategist
I have been keeping an eye on the recent equity rallies, and I want to tell investors that I think they should remain a little bit cautious at this time. History is replete with liquidity-driven rallies within recessions that ultimately fail. I want to see the beginning of a long-term secular, sustainable bull market, and I do not have all the confirming signs of that right now.
We need to figure out if we are simply witnessing a short-term bear market rally or the beginning of a long-term bull market.
Let’s look to history for some patterns
The deeper the initial drop in stocks, the bigger the bounce. History shows that stock rallies are fairly frequent in the middle of a recession. It also shows that they often get smacked down. Right now, we are experiencing the biggest Read the rest of this entry »
- G-20 calls for more regulation; pledges $1T+ in emergency aid
- Oil tops $53 per barrel
- U.S. unemployment hits 25-year high
- FASB votes to relax mark-to-market rules
- ECB cuts rates
- Emerging markets rally on Mexico bid for IMF loan
U.S. stocks rose this week, buoyed by signs that the economic slowing may be abating and by efforts of world leaders to end the global crisis. News this week was dominated by a meeting in London of the Group of 20 policymakers, who called for stricter limits on hedge funds, executive pay, credit rating firms, and on risk taking by banks. In addition, the group tripled the lending power of the International Monetary Fund, expanded its reserves, and offered cash to revive trade to help governments weather the turmoil resulting from the surge in unemployment. Altogether, leaders pledged more than $1 trillion in emergency aid to lessen the economic fallout. Read the rest of this entry »
- Toxic-asset plan well received
- Economic data show some improvement
- Corporate profits slump in fourth quarter
- Japanese exports plunge 49%
Stocks ended the week higher as several reports raised hopes that the economy may be turning a corner, and investors responded enthusiastically to the White House’s plan to clean banks’ balance sheets. The success of the U.S. Department of the Treasury’s seven-year note auction also buoyed sentiment, convincing investors that the Treasury could still raise money at reasonable rates. During the week, the Dow Jones Industrial Average firmly entered so-called bull market territory, gaining more than 20% since its March 9 low.
U.S. economic news
Toxic-asset plan buoys markets
U.S. Treasury Secretary Timothy Geithner detailed the Obama administration’s Public-Private Investment Program, a plan intended to clean toxic assets from banks’ balance sheets. The two-part program aims to boost purchases of bad loans and real-estate related securities and will use up to $100 billion of bank rescue funds from the Treasury as well as financial guarantees from the U.S. Federal Reserve Board and Federal Deposit Insurance Corporation (FDIC). Read the rest of this entry »
- Global stocks rally as banks announce profits
- World finance ministers gather to find ways to battle recession
- U.S. retail sales show stabilization
- Madoff jailed
- GE, Berkshire Hathaway downgraded
- Brazil and Switzerland cut rates
Market optimism returned in full force this week after Citibank, Bank of America, and JPMorgan Chase said they made money during the first two months of the year. Around the world, stock markets rallied on hopes that stability was returning to the financial sector. Citibank kicked off the markets’ rise when it said it was having its best quarter since 2007. The news sent the Dow Jones Industrial Average up 379 points Tuesday, thereby kicking off a week of gains. Read the rest of this entry »
In the immortal words of Peter Finch in the movie “Network,” Are you mad as hell and not going to take it any more?
I hope so because I am. My rage has been building for a few weeks now but it is about ready to explode. Especially considering the news that the Securities and Exchange Commission failed to pursue allegations of wrongdoing against good ol’ Bernie Madoff, the financial wizard who has managed to squander an estimated $50 billion (that’s BILLION, folks, with 10 zeroes) of other people’s money in what now appears to be a Ponzi scheme of gigantic magnitude. Read the rest of this entry »
posted
Apr 23, 2009 by Lamar Thames
