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Market Commentary The markets were relatively quiet yesterday The markets were relatively quiet yesterday digesting data that was nominally weaker than expected and a host of central bank officials stating the recovery will be slow and uneven. As widely noted the markets have almost retraced half of last year’s plunge but are still down about 30%-35% from their apex. Many including me believe the markets are over extended and could decline by 5%-7%. This view is not new, one that I have held for about 3 months and 1500 points ago. However as all know, markets rarely follows the consensus view. As also penned many times the data and profits have been consistently stronger than expected, the catalyst for the unrelenting advance. What are the odds the economy will continue to grow at a pace faster than expected and inflation remaining benign? Monday estimates for fourth quarter growth were revised up to around 2.7%. In mid October the consensus view was about 1.5%. Inflation is not even on the radar. Obviously this growth is from such low levels any increase appears large. However the simple fact of the matter is growth is returning at a pace considerably faster than anyone had expected. If this scenario does evolve, one that is far from the prevailing view, all will conclude that this crisis has indeed been one where the unexpected had occurred. Today is another data filled day. The CPI, housing starts and building permits are released. Last night the foreign markets were mixed. The Dow should open nominally higher on anticipation of continued strength in housing starts. The 10-year is off 7/32 to yield 3.35%. The information is the personal views of Kent Engelke and is not necessarily indicative of those of Capitol Securities Management. The information contained herein has been compiled from sources believed to be reliable; however, there is no guarantee of its accuracy or completeness. Any opinions expressed here are statements of judgment on this date and are subject to certain risks and uncertainties which could cause actual results to differ materially from those currently anticipated or projected. Any future dividends, interest, yields and event dates listed may be subject to change. An investor cannot invest in an index, and its returns are not indicative of the performance of any specific investment. Past performance is not indicative of future results. Capitol Securities Management, Inc. is a Mid-Atlantic based, privately owned brokerage and investment firm with branch offices in Mclean and Richmond, VA, Boston MA, Hickory, NC, Florham Park, NJ and Tampa, FL. Capitol employs over 170 fulltime investment professionals and independent affiliates in locations from New England to Florida and has been serving the needs of its investors for over 25 years. It is a member of FINRA and SIPC. © Copyright 2008 Capitol Securities, Inc. All Rights Reserved. |
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