This is Louis Navellier. It is Tuesday, October 7th.
Well, let me tell you what's happening. First of all, we had good news on the commercial paper front. The Federal Reserve is intervening and starting to buy commercial paper. This is so important, folks, because the commercial paper market has been frozen ever since Lehman Brothers went bankrupt.
So, this is a very, very positive development. Big companies like General Electric and credit card companies go to the commercial paper market for short-term funding. So, that was a big development. That's the good news.
The bad news is the LIBOR rate, which is the inter- bank lending rate, is still very, very high because banks don't trust each other. There are very serious banking problems in Britain. They've been having some meetings, there's supposed to be a bailout package announced on Wednesday, but the truth of the matter is, is any bailout package is just a bandaid on the problem. What the market needs, what the market wants, and what the market is demanding are massive central bank rate cuts. Now, we had a rate cut in Australia, a full one percent. What we need is a rate cut from the Bank of England, they're going to meet this week, so we expect at least a half percent cut. The European Central Bank is supposed to meet in early November. We need a cut from them; a significant one half a percent would be nice. Our Federal Reserve meets on October 28th and 29th and in all candor we expect a full one percent rate cut but we'd like it before then. You see, Ben Bernanke talked today and he acknowledged that the economy is weak; he acknowledged that there are some complications out there and so we're all saying, "Okay Ben, where's the rate cut?" And the market sold off after his speech today because we're just waiting for the cut. We want a full one percent Federal Reserve rate cut; that would spark an incredible rally in the market. The cash on the sidelines is well over thirty percent of market value; it's the highest I've ever seen in over three decades.
So, this if very, very exciting. We think there will be a spark that will cause money to pour into the market. In the interim, our energy stocks and agricultural stocks were up for much of the day. They did settle down late in the day, but they held up much, much better. We hope they will merge an oasis. This is where some of the strongest earnings are and the third quarter earnings are around the corner. According to Zacks, they're supposed to be up six percent over the same quarter a year ago. These are easy year-over-year comparisons because in the third quarter a year ago, there were some big write downs, but the market can get bailed out by earnings, but more than likely they'll be bailed out by a Federal Reserve rate cut. So, hang in there folks. We're not sure what's going to spark the market. It could be something as simple as Mr. Obama saying that he can't raise taxes in this environment. That could spur the market on, but I think we really need leadership from the Federal Reserve. So, let's hope they have that full one percent rate cut and then we'll have a big rally and we'll wonder what the fuss was about. In the interim, this is a challenging environment, but I am encouraged that a rate cut is definitely going to be forth coming. I'm encouraged by the strength in agriculture, energy, and other stocks that are going to have good third quarter earnings. We can almost see the light at the end of the tunnel here folks. Let's just hope that we get our rate cuts so that the market can rally and remove a lot of the uncertainty out there. Take care everybody, I know this is tough for a lot of people and I know this is very, very stressful.
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Crew Capital Management Thoughts on Investment
Welcome to the Crew Capital Management Thoughts on Investment blog. At Crew Capital, investment education is key to how we work with our clients. We hope our conversation and analysis entice you to think further on your investment strategies and planning. For further discussion, please contact us at rjung@crewcapital.com
Thank you!
Robert F. Jung, CFA CPA*
*CPA inactve
Thank you!
Robert F. Jung, CFA CPA*
*CPA inactve
Wednesday, October 8, 2008
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Crew Capital enters into a new client relationship only after it provides and obtains certain information. In addition, Crew Capital may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. Every prospective Crew Capital client is provided with a copy of Crew Capital ’s Privacy Policy, Form ADV Part II and Form ADV Part II Schedule F. Also, the USA Patriot Act, passed in response to the events of September 11, 2001, requires certain financial service providers to request specific information from clients. Accordingly, Crew Capital acts to verify a potential client's identity and makes a risk assessment of their financial and business activities. Lastly, Crew Capital will not provide any investment advice or supervision without a fully executed Investment Advisory Agreement.
As a registered investment adviser, Crew Capital is required by rule to adopt and enforce a code of ethics that establishes the standards of conduct expected of all employees and reflects our fiduciary duties. A copy of Crew Capital’s Ethics Policy will be provided to any client or prospective client upon request.
Nothing on this web site shall be construed as advice to any particular investment need or investor. All references regarding investment or portfolio returns are based on historical data. One should not assume that this performance will continue in the future as past performance or results are not an indication of future performance or results.
Certain portions of Crew Capital’s web site (i.e. books, newsletters, articles, commentaries, etc.) may contain a discussion of, and/or provide access to, Crew Capital’s (and those of other investment and non-investment professionals) positions and/or recommendations as of a specific prior date. Due to various factors, including changing market conditions, such discussion may no longer be reflective of current position(s) and/or recommendation(s). Moreover, no client or prospective client should assume that any such discussion serves as the receipt of, or substitute for, personalized advice from Crew Capital or from any other investment professional. Crew Capital is neither an attorney nor accountant, and no portion of the web site content should be interpreted as legal, accounting or tax advice.
At certain places on this site, live "links" to other Internet addresses may be accessed. Such external Internet addresses contain information created, published, maintained, and otherwise posted by institutions or organizations independent of Crew Capital. Crew Capital does not endorse, approve, certify, or control these external Internet addresses and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, timeliness, or correct sequencing of information located at such addresses. Use of any information obtained from such addresses is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference therein to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by Crew Capital.
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