Economics
Another statistical look at the mortgage problem:
http://mjperry.blogspot.com/2008/03/mortgage-troubles-concentrated-not.html
And a delinquency rates:
http://mjperry.blogspot.com/2008/03/commercial-mortgage-delinquencies-end.html
A common sense solution to the mortgage meltdown:
http://www.american.com/archive/2008/march-03-08/capital-ideas
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The Fed met yesterday and made the decision to lower the Fed Funds rate and the discount rate by 75 basis points each. In its accompanying statement, the Fed said that it was more worried about recession and more worried about inflation. The facts that the futures markets didn’t get the 100 basis point cut they were anticipating and that there were two dissenting votes (they wanted a 50 basis point cut) suggests that the Fed is conceding that the inflation problem is out there and it was willing to disappoint investors in order to make that acknowledgement. All said, yesterday’s action, in my opinion, was of far less consequence that last week’s moves to open the discount window to investment banks and to insure that there would be no debt defaults resulting from illiquidity.
http://bigpicture.typepad.com/comments/2008/03/fomc-75-bps.html
As a final observation, the Fed has now committed over 50% of its assets to supporting the various and sundry problems that have arisen from the credit crisis. If no additional liquidity/default problems are encountered, this won’t be an issue. I simply point it out because for every new credit crisis that arises (when as and if they do), the Fed’s flexibility to address that difficulty will become increasingly impaired.
Politics
Domestic
Economists on the candidates:
http://article.nationalreview.com/?q=NWYzNzZlOTgyZGU2ZDFiYTdiM2QwYmE2OTRiM2Y3N2Y=
International War Against Radical Islam
In case you didn’t see or hear about this poll of Iraqis:
http://abcnews.go.com/PollingUnit/story?id=4444000&page=1
The Market
Technical
Yesterday was another impressive day technically speaking. For one, Monday’s rally continued and took the S&P index back above the 1982-present uptrend (1285) after a second one day violation. Second as noted above, investors were expecting a 100 basis point cut in the Fed Funds rate, didn’t get it, but (to my surprise) continued to push stock prices upwards.
Just to give you an idea of resistance levels that I am watching:
(1) DJIA: the August 2007 low [12500], the November 2007 low [12722--the DJIA has tried twice to get through this level and failed] and the down trend line from the December 2007 high [12495--note the proximity to the August 2007 low],
(2) S&P: the August 2007 low [1370], the November 2007 low [1406] and the down trend line from the December 2007 high [1354].
Fundamental
Subscriber Alert
While yesterday’s rally had a dramatic impact on the relative price levels of many of the stocks I had marked for elimination, it did nothing for the relative performance of others. Given the magnitude of the rise and my assumption that stocks are for the moment in a trading range, I think that we have to take some money off the table.
In addition to the sale of the remaining shares in McGraw Hill (Dividend Growth Portfolio) and CME Group (Aggressive Growth Portfolio) yesterday, this morning at the Market open:
(1) the High Yield Portfolio will Sell one third of its positions in Martin Midstream LP (MMLP-$31). In addition, as a result of its stock price trading near its Sell Half Range, the High Yield Portfolio will also Sell a one quarter position in Quaker Chemical (KWR-$27),
(2) the Aggressive Growth Portfolio will Sell its remaining shares of Rockwell Collins (
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A reason for caution:
http://bespokeinvest.typepad.com/bespoke/2008/03/rampant-bottom.html
And another:
http://bespokeinvest.typepad.com/bespoke/2008/03/short-coverin-1.html
News on Stocks in Our Portfolios
More Cash in Investors’ Hands
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