GSA March Market Snapshot
Grand Street Advisors
Market Snapshot
March 2012
We have an update on the state of the economic recovery. We believe accumulated data suggests the US economy has finally breached the Motarin Nebula (thank you Capt. Kirk) or more commonly referred to here as breakaway velocity from the gravitational pull of the horrific near fatal recession. We've recently received the second scoring of fourth quarter GDP which was upgraded from 2.8% to 3%. On the all important real time jobs front we saw our second consecutive reading of 350,000 +/- on weakly jobless claims. GSA believes this figure is more important than the widely followed monthly reported non-farm payroll figure. The non-farm payroll is a figure compiled from the previous month, or from looking in the rear view mirror to gauge the current job environment, whereas unemployment claims are reported weekly. As for the monthly figure to be released this upcoming Friday, the figure should come in above 200,000 once again, setting in place a three month trend analyst won't be able to dismiss any longer.
This sounds great taken with the EU finally coming to consensus on the Greek bailout. Market participants, including myself breathed a collective sigh of relief when the deal was first announced. As we approach the deadline for debt holders to sign on we find out some large investors (hedge funds) are refusing to sign off on the exchange. The purchased deeply discounted Greek debt along with an insurance policy (Credit Default Swaps-CDS) against a possible default Should Greece not receive enough tenders for the debt "restructuring", it would trigger a "credit" event and force payment of the CDS contracts written against the ongoing Greek default. We'll find out tomorrow how this drama ultimately plays out and any ripples from across the pond.
The improving jobs front, increased productivity, the reemergence of the ever resilient US consumer, booming auto sales all point to the US economy being on much firmer footing and ready to resume it's place as the driver of the global economy. We do believe however, the question arising will be, front and center, is this rally in asset prices we've been experiencing solely liquidity driven (Federal Reserve Monetary Policy) or does it have real legs driven by fundamentals and strong sustainable growth? If the prior, look out because as the economy continues to strengthen the need for further Quantitative Easing lessens draining the fuel tank from this bull market. If the latter, that the economy is in a pro-growth sustainable mode where consistent job creation introduces a higher level of consumption into the equation, well all's well in the world and look out above.
GSA believes we are in the late stages of the US economy "coming about" to borrow a nautical term. The turn we've made has been painful, long and drawn out due to the severity of the downturn and size of our economy along with structural imbalances. As the global economy continues to experience the lagging side effects from the near collapse of the global financial system along with the US economy catching a case of the flu, accommodative monetary policy should continue to be the most likely response. This should, barring a severe shock to the market, such as a super spike in oil, lead to a global resumption to consumption and higher corporate revenues and earnings.
On energy. We believe Iran does not wish to enter a war on any front with Israel, the US or its neighbors, but needs to find a way to back away from their Presidents' nuclear ambitions without losing face. Until we are able to see a path forward in this high stakes face-off , oil prices should remain elevated and markets skittish as $4 gasoline or potentially much higher, takes a hefty bite out of discretionary spending for the greater part of America's consumers.
We'll be watching 1.the Greece debt restructuring tomorrow along with weekly unemployment claims. 2. Friday's non-farm payroll number along with the household survey and workweek figures. and 3. The ongoing negotiations between IAEA nuclear inspectors and Iran. Should there be any unpleasant surprises we will be in contact immediately to adjust our equity allocations.
Thank you again for your patience in these ever trying times.
Yours in pursuit of the KWAN!
--
Market Snapshot
March 2012
We have an update on the state of the economic recovery. We believe accumulated data suggests the US economy has finally breached the Motarin Nebula (thank you Capt. Kirk) or more commonly referred to here as breakaway velocity from the gravitational pull of the horrific near fatal recession. We've recently received the second scoring of fourth quarter GDP which was upgraded from 2.8% to 3%. On the all important real time jobs front we saw our second consecutive reading of 350,000 +/- on weakly jobless claims. GSA believes this figure is more important than the widely followed monthly reported non-farm payroll figure. The non-farm payroll is a figure compiled from the previous month, or from looking in the rear view mirror to gauge the current job environment, whereas unemployment claims are reported weekly. As for the monthly figure to be released this upcoming Friday, the figure should come in above 200,000 once again, setting in place a three month trend analyst won't be able to dismiss any longer.
This sounds great taken with the EU finally coming to consensus on the Greek bailout. Market participants, including myself breathed a collective sigh of relief when the deal was first announced. As we approach the deadline for debt holders to sign on we find out some large investors (hedge funds) are refusing to sign off on the exchange. The purchased deeply discounted Greek debt along with an insurance policy (Credit Default Swaps-CDS) against a possible default Should Greece not receive enough tenders for the debt "restructuring", it would trigger a "credit" event and force payment of the CDS contracts written against the ongoing Greek default. We'll find out tomorrow how this drama ultimately plays out and any ripples from across the pond.
The improving jobs front, increased productivity, the reemergence of the ever resilient US consumer, booming auto sales all point to the US economy being on much firmer footing and ready to resume it's place as the driver of the global economy. We do believe however, the question arising will be, front and center, is this rally in asset prices we've been experiencing solely liquidity driven (Federal Reserve Monetary Policy) or does it have real legs driven by fundamentals and strong sustainable growth? If the prior, look out because as the economy continues to strengthen the need for further Quantitative Easing lessens draining the fuel tank from this bull market. If the latter, that the economy is in a pro-growth sustainable mode where consistent job creation introduces a higher level of consumption into the equation, well all's well in the world and look out above.
GSA believes we are in the late stages of the US economy "coming about" to borrow a nautical term. The turn we've made has been painful, long and drawn out due to the severity of the downturn and size of our economy along with structural imbalances. As the global economy continues to experience the lagging side effects from the near collapse of the global financial system along with the US economy catching a case of the flu, accommodative monetary policy should continue to be the most likely response. This should, barring a severe shock to the market, such as a super spike in oil, lead to a global resumption to consumption and higher corporate revenues and earnings.
On energy. We believe Iran does not wish to enter a war on any front with Israel, the US or its neighbors, but needs to find a way to back away from their Presidents' nuclear ambitions without losing face. Until we are able to see a path forward in this high stakes face-off , oil prices should remain elevated and markets skittish as $4 gasoline or potentially much higher, takes a hefty bite out of discretionary spending for the greater part of America's consumers.
We'll be watching 1.the Greece debt restructuring tomorrow along with weekly unemployment claims. 2. Friday's non-farm payroll number along with the household survey and workweek figures. and 3. The ongoing negotiations between IAEA nuclear inspectors and Iran. Should there be any unpleasant surprises we will be in contact immediately to adjust our equity allocations.
Thank you again for your patience in these ever trying times.
Yours in pursuit of the KWAN!
--
posted by James | 9:29 AM
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