The Fever Has Broken

excerpts from this week's report:

“…liquidity conditions in markets are still substantially impaired and the process of de-leveraging remains underway. And this will amplify the headwinds facing the US and global economy.”

NY Fed President, Timothy Geithner, in his written testimony to Congress last week.

“David Bowers of Absolute Strategy Research points out that firms outside the finance industry were also helped by the credit bubble, which boosted demand for their products and allowed them to enhance earnings per share by issuing debt to buy back stock. Investors may be disappointed once they find out companies cannot return as much cash to shareholders as they did during the boom.”

"Hung, drawn, and first-quartered"
Buttonwood, Economist magazine, April 3, 2008

"The process of awareness of the risks that de-leveraging poses to the real economy is ever so slowing creeping into the consciousness of investors. As the panic of the possible..."

"This effort is a work in progress, an iterative process that will yield what will follow the Minsky Moment and his five stages of the credit cycle:.."

Investment Strategy Implications

"The fever has broken and that is good news. And the very near term offers a respite from the pain that has occurred and the one that will almost certainly emerge as the morphine of stimulus wears off. Accordingly, the appropriate investment strategy appears to be fourfold:..."

also in this week's report:

* Expected Return Valuation Model
* Moving Averages Scorecard
* Model Growth Portfolio
* Sectors and Styles Market Monitor
* Key US Economic Indicators

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