August 11,2010

The investment markets are making a complete round trip.  In June the markets worried daily about a world-wide double dip recession led by the financial collapse of Europe.  In July, after German business confidence surged, retail sales in England surprised the markets to the upside and the lesser European credits experienced no trouble in selling debt, the markets began to change their mind.  U.S. corporate profits also came in solid with companies reporting no slowdown in world-wide sales.  The end result was; July became one of the best performance months for investments in quite some time.  Now comes August and the market is down over 200 points as we type.  The markets are worried about yesterday’s Fed statement of the economy slowing.  

With the above stated, we want to offer the following comments and observations:  There seems to be great concern because the economy is slowing from 4/5% growth to 2/3% growth.  When did 3% growth become “bad”?  The employment situation is not good.  However; average hourly earnings and hours worked continue to show improvement.  Productivity is off the charts good in several industries.  This is a major positive.  Central Bank actions around the world are as “easy” as anytime in history.  There are millions of people around the world creating demand for goods and services to upgrade their lives to middle class.  Interest rates continue to be as low as anytime in history.  All of this is normally associated with economic growth.  We believe the next twelve months will verify our assessment. 

The investment markets will stay strong.  There are not many realistic alternatives.  Good dividend paying stocks with international business are cheap.  We do not see a double dip recession on the way.  The flip flop of worrying should end soon as further evidence of solid world-wide growth continues to surface.   

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