Piercing the Veil

excerpts from this week's report:

"To help understand the consequences of the current credit squeeze, it is worthwhile to distinguish between what can be measured and what cannot.




What can be measured might be considered the low hanging fruit. It is the scenario that progresses from the mortgage mess to its impact on US consumer spending, which then takes the US economy to below growth expectations for the remainder of this year and next possibly resulting in a recession. The larger manifestation of this scenario is a real test of the decoupling thesis – should the US consumer contract, will there..."

"The good news is that the above is measurable and knowable. All items noted are visible. And the investment strategy consequences can be prepared and acted upon.

The bad news is what is not measurable in the current credit squeeze. And that is the big risk factor that should not be ignored..."

"...one would hope that by putting the banks on the hook for the discount window loans they present (which presumably will come from that very same hedge fund/credit derivative black hole world), some light will be shed into the nether world of hedge funds and private equity..."

also in this week's report

• Valuation Model
• 2Q07 Earnings Update
• ETF Model Growth Portfolio
• Key Economic Indicators

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