September 3rd, 2010
The markets had strong gains this week, the Dow ended up 2.9%, the S&P up 3.8%, and the Nasdaq 3.7%. Stocks were boosted Wednesday by good news from Australian and Chinese markets and a positive ISM report. On Friday stocks also gained ground, bolstered by the bureau of Labor Statistics’ jobs report, which showed better-than-expected employment numbers. The report showed that while it may be true that the economy slowed a bit, it is at least not collapsing.
This week’s factoid: The World Meteorological Organization recycles their storm names every seven years, until such time that a hurricane gains enough notoriety that its name is “retired.” Thus, the storm currently threatening Labor Day plans is actually Earl IV.
Tags: hurricane, jobs
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August 27th, 2010
Despite an attempted Friday rally, the markets had another down week, but the Dow did managed to finish the week above the (psychologically) important 10,000. The Dow ended down .62%, the S&P was down .68%, and technology suffered the most, with the Nasdaq down 1.19%.
Weak housing and jobs numbers made investors skittish over the strength and timing of the recovery. Companies’ results are still looking strong, though, so we consider the markets now considerably undervalued.
Tags: Dow, housing
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August 27th, 2010
Dave Stepherson explains why current stock yields will benefit long-term investors and talks about his stock picks, Target and Google.
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August 26th, 2010
Dave Stepherson discusses the DOW and explains his picks of Hewlett-Packard and Abbott Labs.
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August 20th, 2010
The markets had a mixed week. The Dow was down .87% and the S&P lost .7%, while the Nasdaq ended up .28%. Economic data continues to chill investors. The recovery is not coming along as speedily as we all had hoped.
There has been a tremendous amount of money that continues to flow into the bond market. Instead of looking at yield to maturity, many investors instead are looking at their current yield. This sentiment, along with the fear of equities, has pushed bond prices ever higher. It has all the trappings of a bubble.
This week’s factoid: The money sapped from Mexico’s economy from illegal drug trade amounts to 1% of its GDP. President Calderon’s proposal to legalize marijuana is, in part, an attempt to regain some of that cost.
Tags: bonds, recovery
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August 19th, 2010
Jim Hardesty comments on the current state of the economy and discusses his picks in the energy, technology, and industrial sectors.
Host Mark Haines: Rick Santelli.
Host Erin Burnett: It’s just unbelievable down there. Do we get a _________?
Host Mark Haines: That is bizarre. It’s like – a quick check on the markets for you.
… Read more>>> »
Tags: Dow, energy, industrials, Jim Hardesty, recovery, technology
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August 13th, 2010
Stocks suffered this week, with the Dow ending down 3.29%, the S&P 3.77% and the Nasdaq 5.01%. Among many factors bringing down the markets this week was an unexpected rise in weekly jobless claims. Also, Cisco had earnings that beat consensus numbers, but were weaker than the all-important “whisper numbers,” casting further doubt on a smooth recovery. Much of the week’s losses can be attributed to this fear of a continued rocky recovery. Volume was light this week, however, so whoever did bring the volume was in the mood for selling.
Master limited partnerships have been getting attention recently. An MLP has the tax benefits of a limited partnership with the liquidity of a publicly traded company. An MLP pays out nearly all of is profits to shareholders. The arrangement creates a tax headache, as our clients have reminded us, but we maintain that the yields from an MLP can be more than worth it.
Next week, we look for weekly claims (as always), housing starts, and manufacturing and industrial production numbers to dictate trading.
This week’s factoid: The Great Chicago Fire of 1871 killed an estimated 200-300 people. In comparison, Moscow is losing upwards of 700 people per day in its current heatwave, while wildfires outside the city have claimed at least 54 lives.
Tags: Cisco, MLP
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August 5th, 2010
Dave Stepherson discusses the impacts of the Volcker Rule and why big banks such as Goldman Sachs will not suffer.
Host Erin Burnett: Now, Goldman Sachs, planning to spin off its proprietary trading unit to comply with the Volcker rule. This follows Morgan Stanley’s move to spin off its hedge fund business and, well, Goldman Sachs’ note, remember, that they were gonna get into a derivatives exchange business. So file all that. There was an article in the FT today, though, saying American banks are bracing for a slump in trading profits, and the third quarter’s gotten off to a rather slow start. What does it mean for the banking group, biggest in the markets? Chris Whalen joins us, senior VP and managing director at Institutional Risk Analytics, and David Stepherson, vice president and senior portfolio manager at Hardesty Capital Management. Good to have both of you with us.
Chris Whalen: Good morning.
David Stepherson: Good morning.
… Read more>>> »
Tags: banks, Dave Stepherson, Goldman Sachs, Volcker Rule
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July 16th, 2010
The modest gains of this week were erased- and then some- by Friday’s loss. The Dow ended the week down .98%, the S&P -1.2%, and the Nasdaq -.79%. A good jobs report Thursday and stellar earnings from Intel were evidently not enough to bolster confidence. Google’s earnings late Thursday failed to meet bottom-line estimates, while a few financials saw weaker earnings.
Despite the bad news in a few areas, we still feel the recovery is underway. A majority of the leading economic indicators have turned up toward non-recessionary levels. We remain confident in our economy’s growth.
Next week we’ll see more earnings pour in. Hopefully, a majority of good reports will turn this market around.
This week’s factoid: The fact that the Richter scale for earthquakes is logarithmic means that today’s 3.6 magnitude earthquake was more than ten thousand times less powerful than the February 27 earthquake that shook Chile and prompted tsunami warnings.
Tags: earthquake, Google, recovery
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July 13th, 2010
Headlines, not Fundamentals, Driving Markets
The second quarter was punctuated by two major crises: the European financial crisis and the BP oil disaster. Both dramatically affected the market and both arguably had very little impact on our economy. When we look beyond these two headline-grabbing events, we see a continuation of the economic recovery. This market downturn should prove to be a buying opportunity. … Read more>>> »
Tags: employment, Europe, European Union, Greece, oil spill
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July 9th, 2010
The markets had a big week, with the Dow trumpeting past 10,000 to finish the week up5.28% at 10,197. The S&P gained 5.41% and the Nasdaq 5%. Markets looked favorably on both earnings and jobs reports. First-time initial jobless claims dropped by a better-than-expected 21,000. Gold suffered from the optimism in the markets, dipping below $1200 on Thursday, but regained some ground Friday.
We are on the record calling for no double-dip recession. The jobs data and positive earnings reports strengthen our position. The valuations of equities remain extremely low. Also, the IMF revised upward it world growth estimate for the year this week. We believe these data serve as a reminder that the recovery is continuing.
Next week, all the focus will be on earnings. Other economic news will take a back seat to the outlook given in next week’s announcements. We look for strong earnings to come through.
This week’s factoid: BP predicts it may be able to contain all of the flow from its broken well in the next four days.
Bonus factoid: In 1943, Thomas Watson, chairman of IBM, predicted that there would be a “world market for maybe five computers.”
Tags: double-dip, jobs
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July 8th, 2010
Jim Hardesty explains that the economy is in a “jagged recovery phase,” and downplays bearish forecasts. He also discusses his stock picks in the industrial sector.
Host David Asman: Investors are looking for smart plays in this market after last week’s sell-off.
Host Liz Claman: James Lebenthal, president of Equity Asset Management for Lebenthal and Company, along with Jim Hardesty, Hardesty Capital Management president and founder, join us now with some picks.
And, Mr. Lebenthal, when you are looking specifically for names in this volatile atmosphere, what do you avoid doing? What is the biggest mistake investors often make?
… Read more>>> »
Tags: industrials, Jim Hardesty, recovery
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June 25th, 2010
The major markets continued in their volatility this week, this time swinging down: the Dow finished the week down 2.94%, the S&P 3.64%, and the Nasdaq 3.74%. The slide was despite a better-than-expected jobs report and durable-goods orders. As noted earlier, volatility is unnerving, but we still think the economy should continue pushing upward.
The European debt crisis continues to be the buzz in the media. After some analysis, we believe that, discounting currency changes, a slowdown in European growth might not be all that terrible for the U.S. economy. Look for a more thorough report on the subject from us in the coming two weeks or so.
This week’s factoid: The Center for Economics and Business Research (CEBR) in London estimates that $4.8 billion in productivity is lost worldwide due to the World Cup.
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June 18th, 2010
Dave Stepherson talks about Ultra Petroleum and the increasing role of natural gas in the administration’s energy policy moving forward.
Host Erin Burnett: All right. We got the Friday Trade. So the S&P’s up about two percent this week although we’re sort of flat for stock for the year. Hey. Given what’s going on, maybe we should be glad to be flat. So what do you do on this Friday? Alan Valdes, a vice president of DMA Securities. David Stepherson, senior portfolio manager of Hardesty Capital Management. Good to have both of you with us.
Alan Valdes: Thanks, Erin.
Host Erin Burnett: So stop thinking soccer, and tell us what to do.
… Read more>>> »
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June 15th, 2010
Last week provided a nice set of gains, with the Dow up 2.81%, the S&P up 2.50%, and the Nasdaq trailing, but still up at 1.10%.
We’ve gotten some interesting new insight into the popular BABs (Build America Bonds). BABs are part of the American Recovery and Reinvestment Act, which was signed into law on February 17, 2009. In short, BABs look attractive because the Federal government picks up the tab for the tax on such bonds- so municipalities are able to offer bonds that compete with corporate issues. This sounds like a great arrangement for investors. And it can be- if everything works as planned. However, if the municipality goes into default, the federal government holds back the portion of the interest on the bonds for which it is responsible. BABs, then, are not as great as some would believe.
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