It looks like we are very close to the moment of truth, with the following 2 weeks being extremely critical to give us an idea of how the rest of the year will shape up and if indeed, we have just witnessed a massive bear market rally.

Despite the fact that expectations for earnings are so low that it may be difficult for companies not to beat them, the outlooks they will provide, coupled with economic data such as unemployment, home sales, etc… will highlight the real current situation and how realistic hopes for a fast recovery are.

Once we have a clear picture of the above and notwithstanding the fact that markets will remain choppy, investors will be in a much better position to make informed decisions on what framework to use for their investments and how to concretely structure their portfolios.

Make sure you’re ready!

Markets continue to hold as Washington is propping up the economy and trying to feed us all this green shoot propaganda but how are we going to deal with the recovery?

The past two months have see the price of oil rise by almost 50% whilst most other commodities are also rising fast (i.e. copper +30%) but with unemployment claims well over 600K, continuing claims continuing to rise… well on our way to a double digit unemployment figure? Are we missing something here?

We still have to see how Madoff and Stanford play out and all of this, as we start entering earnings season… we may be pessimistic but we would suggest investors brace themselves for a bumpy ride!

Former Texas billionaire and cricket promoter Sir Allen Stanford has appeared in a US court charged over a multi-billion-dollar scheme to defraud investors… sadly enough, after Madoff & Co. people are simply not that shocked anymore (unless you had invested with him!).

Is this it or are there more surprises to come, more ponzy schemes and more fraud? What will be interesting to follow in this specific case, is that Stanford has repeatedly claimed that he knows nothing of this alleged ponzy scheme and that he will fight the charges with all he’s got! We shall see, but we find it hard to believe that he’ll manage to get out of this one…

It looks like they are making some progress but it still feels like this is moving along very slowly…

So it looks like The Treasury has given the green light for 10 banks to repay their TARP capital and therefore will be receiving 68bn back in repayments -> let’s hope that this is the ultimate sign that these banks are getting back on track, as we do not want to even try and imagine what would happen if they need to borrow some of the money back…

So should we focus on the fact that The Treasury has netted a couple of billion and that things are OK or should we still be worried that these banks have broken free from government control before all measures and reforms have been taken to avoid future problems and a repeat of the crisis?

There is a real possibility that these 10 banks will go back to business as usual whilst the others will continue to struggle and find it harder to get back on their feet, now that it is ‘official’ that they are the weaker players…

It really feels like there will be more surprises before we actually see the light at the end of the tunnel!

The initial battle has been lost but this is an interesting piece on how Bill Ackman tackled this issue and his views on the company, corporate governance and the road ahead for Target:

This is just the first part, you can click on the YouTube side bar to see the other segments.

Enjoy!

His track record speaks for itself and it is always a treat to listen to his thoughts.

Having averaged double digit growth since inception, he is not only scooping up great value plays but also senior credit in selected companies that will easily allow him to continue with the stellar performance:

As usual, words of wisdom and worth taking notes!

It looks like the market is looking to pause and  hopefully review the situation.

Despite predictions that the recession will end soon and all of the positive talk coming from Washington, the Enterprising Investor needs to remember that the markets are NOT the real economy and even if markets tend to recover months ahead of the economy, we still cannot ignore the fact that consumers have lost sight of the real situation: we still have massive housing inventories, banks are not lending, the price of oil is rising, over half a million workers have been losing theirs jobs each month since last October, and not to mention toxic assets held by German and British banks, the situation in eastern Europe and so on….

The world has never faced this type of situation and we find the fact that  general sentiment appears to be improving and stock markets continue to rise quite unsettling.

Following on from our previous post:

Enjoy!

We all know that there is no point in trying to time the market but how long will this rally last?

We may be wrong but we still feel that the fundamental problems that caused the downturn have not been resolved and that the only REAL action from governments has been to print more money… wasn’t one of the main reasons that got us here the availability of cheap money?

Companies are not making money, banks are not lending and most experts and business leaders remain very cautious… but once again, greed in fueling the move up. Too many people – despite knowing that we are still in trouble – are scared of missing out on the rally and keep on pushing prices higher… how long will this last, or better said, how long can this last?

OK, things are stabilizing but enough for a 30+% rally?