Commentary for October 30th, 2009

Stocks rebounded yesterday from the drubbing it took on Wednesday as a result of the better than expected 3.5% annualized Q3 GDP growth rate, this after having fallen by 0.7% and by 6.4% during Q2 and Q1, respectively.  Many will state that this was due to the $8,000 first time homebuyers tax credit as well as the “cash for clunkers” automobile incentive.  We agree and think that investors should remain watchful to determine if consumers and private industry will take the baton from the public sector as has been the historical norm, when analyzing past recessions.  One must also recognize the rising importance of the roles of the “BRIC” Countries, (Brazil, Russia, India and China) in the global economy.  The U.S. is still the dominant economy, but not nearly as much so as even a decade ago.  That is good as it provides markets for our goods and services and has indeed softened the recession here in the U.S.

We continue to believe that the downside is somewhat limited and that the U.S. stock market will churn around at these levels for a period of time.

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