BULL MARKET FOR BONDS, STOCKS IN CORRECTION
By Gus Krafve
July 7th, 2010
June was another rough month for the stock market with the S&P 500 posting a decline of 5.23%. The economic data is coming in below expectations but continues to point to an expanding economy. Several companies will be reporting second quarter earnings results in the next few weeks. These earnings reports are coming at a ........................
...read more!
Excessive Pessimism Is Currently Prevailing Despite The Improving Economic Backdrop
By Gus Krafve
June 4th, 2010
Certainly, the month of May has been the most volatile and worst performing month for the stock market since we embarked on this current 14 month recovery in equity prices, which began in March of 2009. We now have our first official correction since the March 2009 bottom, with the market down just over 10% from its April highs. Rather than continuing to focus on the recovering economic data, investors have.................
...read more!
What's Driving the Economic Recovery?
By Stephen Smith
May 7th, 2010
I'd like to start by looking at the performance of three major asset classes and their appropriate benchmarks: the United States equities markets, International equities, and the United States bond market. For the United States equities, I will use the S&P 500 index; for International equities..........
...read more!
STABILITY AND PROFITS: TREASURY'S PLAN PAYS OFF
By Stephen Smith
April 6th, 2010
The Troubled Asset Relief Program (TARP) was a program created during the recent crisis to purchase assets and equity from banks in order to strengthen the financial sector. The United States government allocated $700 billion to the program in 2008. On October 14, 2008, Secretary of the Treasury Paulson and President Bush announced.........
...read more!
The Fed Hikes The Discount Rate: Another Step Toward Normalization
By Gus Krafve
March 3rd, 2010
Effective February 19, 2010, the Federal Reserve Board raised the discount rate by 0.25% to 0.75%. It was the first increase in the rate since May 10, 2006. The discount rate is the interest rate that a bank is charged to borrow short-term funds directly from the Federal Reserve Bank. This is not to be confused..........
...read more!
Bernanke's Enigma
By Stephen Smith
February 4th, 2010
In my previous Market Insights, "The Fed Update," I stated that Ben Bernanke would be confirmed by the Senate but would receive more no votes than Paul Volker's 16 in 1983, but I didn't expect the Senate.........
...read more!
A Year In Review, The Glass Is Now Half Full
By Gus Krafve
January 6th, 2010
First and foremost, we want to take this opportunity to thank all of our clients who have navigated this tumultuous year with us. We appreciate your business and thanks to you we have finished 2009 with $454 million in client assets, the highest level...............
...read more!
The Fed Update
By Stephen Smith
December 4th, 2009
I talked about the Federal Reserve in the March 2008 "Market Insights" and thought an update would be appropriate. Here is a brief description of the Federal Reserve's mandate..........
...read more!
The US Dollar - An Investor's Primer
By Gus Krafve
November 6th, 2009
The U.S. dollar was created and defined by the Coinage Act of 1792. The first dollar coins were issued by the United States Mint which was established in 1792. It specified a "dollar" to be between 371 and 416 grains (27 g) of silver (depending on purity) and an "eagle"............
...read more!
Build America Bonds
By Stephen Smith
October 2nd, 2009
Build America Bonds were established as part of the economic stimulus plan known as the American Recovery and Reinvestment Act of 2009 which was signed into law by President Obama on February 17, 2009. Build America Bonds allow state and local governments to issue...........
...read more!
Market and Data Continue Positive Trend
By Gus Krafve
September 8th, 2009
In the third week of August, Central bankers gathered at the Federal Reserve Bank of Kansas City's annual economic policy symposium in Jackson Hole and confirmed the view that the global economy is set to emerge from recession. We wrote about the end of the recession.........
...read more!
The Volatility Index
By Stephen Smith
August 5th, 2009
The Chicago Board of Options Exchange in 1933 introduced the Volatility Index (VIX), which was originally designed to measure the market's expectation of thirty day volatility of the S&P 100 Index. In 2003, the Chicago Board of Options Exchange along with Goldman Sachs updated the .................
...read more!
The Recession's End Appears Near
By Gus Krafve
July 6th, 2009
We are in the longest recession of the post-war era, surpassing the early 1980's recession which lasted 16 months. However, the latest economic and market data is suggesting the current recession appears to be nearing an end. In the post-war era, there have been......................
...read more!
BANKING STRESS TEST RESULTS
By Stephen Smith
June 3rd, 2009
The Supervisory Capital Assessment Program (SCAP) embarked on a comprehensive simultaneous assessment of the capital held by the 19 largest U.S. bank holding companies. A banking organization holds capital to guard against.........................
...read more!
End of the Bear's Grip?
By Gus Krafve
May 7th, 2009
The current stock market rally has been extraordinary. The S&P 500 is up 28.5% from March 9 to April 30. As we have written in Market Insights and discussed with several of our clients, the more violent the market...............
...read more!
The Troubled Asset Relief Program
By Stephen Smith
April 8th, 2009
Putting the financial system in working order remains the ultimate priority facing government policymakers. An economy's natural, self-correcting mechanism during a recession is for interest rates to fall as the Federal Reserve lowers monetary conditions and demand for credit...........
...read more!
Comparing the Current Bear Market to Other Bear Markets of the Past 110 Years
By Gus Krafve
March 5th, 2009
The old adage goes "buy low and sell high." So with the market down over 50% from its high, why isn't there a rush of buyers coming into the stock market? Thus, the nature of a bear market, which is generally defined as a ...........................................
...read more!
OF CONFIDENCE AND CAPITALISM
By Stephen Smith
February 5th, 2009
The fear of a nationalization of the banking system continues to scare equity markets. Only days into the Obama presidency, members of the new administration and leaders in Congress are already.............
...read more!
AULD LANG SYNE 2008
By Gus Krafve
January 8th, 2009
Borrowing the words of the Scottish poet, Robert Burns, let us hope that the market we experienced last year is 'old long past'. The S&P 500, an index of the largest 500 US based stocks, lost 37% in 2008. To put this in perspective, we looked.............
...read more!
The Big Credit Freeze Starts To Thaw
By Gus Krafve
December 4th, 2008
The economic news is still negative, but the data tells us that the credit markets are thawing. Prime mortgage, LIBOR and commercial paper rates have all been steadily declining. This news hasn't made the headlines, but................................
...read more!
When Will the Bear Retreat to Its Den?
By Stephen Smith
November 5th, 2008
With the global equity indexes down as much as they are in 2008, investors are caught in the headwinds of a severe and volatile bear market. The prospect for a meaningful recovery in stock prices is contingent upon improved credit markets and better clarity on the size...
...read more!
UNPRECEDENTED TIMES
By Gus Krafve
October 3rd, 2008
What we have witnessed in the global financial markets has no real historical precedent in modern times. A spiral of bad debts, credit downgrades and collapsing equities turned into a full-fledged global market meltdown. Credit markets seized up, and many........................
...read more!
Auction Rate Securities-Another Example of the Investor Losing
By Gus Krafve
September 5th, 2008
As if the current stock market correction and credit crisis weren't enough, there is another slice of the financial markets that has caused angst among some investors. The market I'm referring to is the Auction Rate Securities (ARS) market. Many of you reading this piece.............
...read more!
Fannie & Freddie: Uncle Sam to the Rescue
By Stephen Smith
August 5th, 2008
Fannie Mae was created during the Depression to make sure that sufficient funds were available to mortgage lenders, and then re-chartered by Congress in 1968 as a public traded company. Freddie Mac was created by Congress in 1970 and acts similarly to Fannie Mae. Fannie and Freddie work like this...
...read more!
Bears Still in Control
By Gus Krafve
July 7th, 2008
The numbers are in for the first half of 2008, and it will go down as the worst first half since 1970. Virtually all broad equity indices have posted at or near double-digit negative year-to-date returns...
...read more!
Crude Is The Right Word For Oil Prices
By Stephen Smith
June 5th, 2008
Since the beginning of the year, crude oil prices have gone from $87 a barrel to $130 a barrel, a 49% increase! Gasoline pump prices have shot up to a record high of $3.91 per gallon nationally and are above $4.00 a gallon in many regions. As oil prices continue their upward march, concerns...........
...read more!
Big Picture: Follow the Money
By Gus Krafve
May 6th, 2008
Investors have been selling equities in exceptionally large amounts. For the third and fourth quarters of 2007, investors sold a net $390 billion. On the flip side, corporations bought back a similar amount of stock. The exit from the US market is on par with two previous periods, second quarter 1984 and second quarter 1988...
...read more!
The Fed
By Stephen Smith
March 31st, 2008
The Federal Reserve was created when President Woodrow Wilson signed the Federal Reserve Act on December 23, 1913, creating a seven member board of governors, including the Fed chairman, and twelve regional banks. This structure collectively is known as the...........................
...read more!
INVESTOR PESSIMISM NEAR EXTREME LEVELS
By Gus Krafve
February 29th, 2008
The individual investor has not been this bearish since the stock market bottomed in 2002-2003. The data, according to a recent survey by the American Association of Individual Investors, which has 150,000 members...............
...read more!
Historical Look at the S&P 500 During Recessions
By Stephen Smith
February 5th, 2008
With all the talk of a possible recession, it is useful to see how the S&P 500 actually performed during recessionary periods. Here's a table that shows just that...
...read more!
Letter to Clients
By Stephen Smith
January 23rd, 2008
Dear Clients:
There is an adage in the bond market which applies to equities as well, “Quality remains long after the price is forgotten.”
For a lot of investors, even those with quality holdings and a long-term time horizon, the natural human reaction to a precipitous drop in the stock market like we are currently experiencing is to reduce or sell equities, with the hope of stemming future losses.
...read more!
The Prudent Investor
By Gus Krafve
January 18th, 2008
If someone just read the headlines, they probably would have thought 2007 was a bad year for stocks. Given the turmoil in sub-prime and the credit markets, it was a bad year for certain sectors like Financials and Consumer Discretionary...
...read more!
Market Timing
By Stephen Smith
November 26th, 2007
Nothing ignites the fear of losing one's hard-earned investments like a violent, short-term stock market correction. For many investors, even those with a long-time horizon, the natural human reaction to a sudden drop in the stock market is to...
...read more!
The Fed Phenomenon
By Stephen Smith
November 6th, 2007
In my last Market Insights, I tried to explain what was happening in the credit markets. I briefly talked about how the Federal Reserve and central banks globally have pumped massive amounts of liquidity into the system. These banks allow primary dealers, i.e., large banks and broker dealers to pledge....................................................
...read more!
Credit Crisis
By Stephen Smith
August 16th, 2007
I will try to explain what is happening in our financial markets, but it is very difficult to quantify because we still don’t have all the accurate information.
The root of the crisis is years of easy money. The Federal Reserve and Central Banks around the world have kept interest rates low through the................................
...read more!
The Weakened Real Estate Market
By Trust Company Staff
July 2nd, 2007
The first half of 2007 has left us with a lot of nice things to discuss. The S&P 500 returned 7% through the first half, while the Nasdaq was slightly higher at 7.6%. An eight week period from April 1 to May 31 made up the majority of the gains...
...read more!
The Dow Jones Industrial Average
By Stephen Smith
July 8th, 2007
The press likes to gauge the stock market with the Dow Industrial Average, and I wanted to give some historical perspective to this benchmark. The Dow is one of the oldest indexes which was created by Dow Jones & Company’s co-founder Charles Dow. It was first published on May 26, 1896.....
...read more!
The Dog Days of Summer
By Trust Company Staff
June 23rd, 2007
After a yawn-filled first quarter, stocks took a page right out of the late 1990s and soared to record highs on many indices. At one stretch, one had to go back to 1927 to find a percentage comparison of positive trading days in a one-month period...
...read more!
First Quarter 2007 Review
By Stephen Smith
May 2nd, 2007
The overall performance of the broad market in the first quarter has been close to historical norms for bonds and below historical norms for equities.
The first quarter forecasted below trend economic growth...
...read more!
