The Nvest Market Blog, our current thoughts on the Street

Mutating Financial Crisis

posted 09.26.2008 at 10:21 a.m. by bill

The financial crisis is mutating. It is not only pulling in all types of financial institutions (banks, brokerage firms, insurance companies, and Government Sponsored Entities (GSE)), but appears to be affecting some parts of the non-financial economy. The US economy has not to this point entered a recession, but the lack of money flow via borrowing from financial institutions will most likely cause the economy to slip into a mild recession. And, the recovery from a recession may be slow.

The mutating financial crisis, that has swallowed many high profile financial and brokerage firms, has required the Fed, Treasury and government to take drastic action. The US financial markets are going through the greatest peril in 60 or 80 years. As black as the current moment seems, the $700 billion bailout IS the action needed to remove toxic loans from financial institutions balance sheets and allow them to survive.

We are watching closely; we are monitoring closely; we are talking to many highly respected fund managers and strategists to gather current insights. We believe a terrible peril will be averted.

Please click here to read the full alert

permalink | posted in: Market Alert

JPMorgan Chase Agrees to buy Bear Stearns

posted 03.17.2008 at 12:03 p.m. by bill

JPMorgan Chase has agreed to buy rival investment bank Bear Stearns for $2.00 per share (Bear’s stock traded as high as $160.00 just 15 months ago).

Please click here for a brief piece related to that event and the markets.

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March Monthly Commentary Now Posted

posted 03.06.2008 at 3:12 p.m. by bill

Market commentary for March is now posted in the Analysis & Commentary section.

Abstract:

Two fears currently overhang the US economy: recession and inflation. The troubling prospects for a long-running recession and spiraling inflation suggest no quick solution to our financial woes. It started months ago, even years ago, when interest rates encouraged “lenders” to provide money to anyone who could fog a mirror. Irrational exuberance has unraveled into irrational exasperation wherein the financial markets are frozen; finding money is very difficult. The backdrop of frozen credit, akin to clogged plumbing, holds a key to future market recovery. At the moment, it appears this crisis is in slow motion; the credit pipeline is stubbornly plugged and flow is not easily restored. As the clog begins to move, so too will be better days for the stock market.

Other Interesting Thoughts:

Serial Bubbles – The tech bubble peaked in 2000; money then flowed to housing (low interest rates) peaking in 2006; money now flowing into emerging markets and commodities (in particular), which seems priced at irrational exuberant heights. Warning: don’t invest by following the herd or emotions.

permalink | posted in: Market Outlook

Monthly Commentary Now Posted

posted 02.05.2008 at 4:37 p.m. by bill

Market commentary for February is now posted in the Analysis & Commentary section.

Abstract:

January 2008 will likely go down in history as one of the worst starts for the financial markets. Large write-downs by some of the most prominent banks have led those on Wall Street to grow very pessimistic about the prospects of all companies, selling them off without discretion.

It is likely that October ushered in the start of a bear market. If that is the case, we are four months into it; the average bear market lasts just eight. That could mean that better times are not that far off.

In the meantime, we are looking for opportunities to invest client cash in stock funds, which are at great values today relative to a few months back.

permalink | posted in: Market Outlook