Welcome
to the March 4, 2009 issue
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As we remarked last week, weekends are
lethal for the market of late. This week was no exception. Fortunately, this
week – in fact today – an extraneous factor intervened in the form
of news from China. In addition, while the economic indicators here continue
to be gloomy, the discussion shifted today from how bad things are to the various
stimulus moves by the Administration and the Federal Reserve.
The biggest effect to our thinking is the putting into operation by the Fed
of its program to jump-start the consumer loan market, including auto loans.
The program has an unpronounceable name but its effect will be very pronounceable,
getting loans to the consumer to stimulate the purchase of bigger ticket items.
Credit needs to flow easily for the consumer, and it has not for some months.
As for China, it appears that China is going in for another round of stimulus.
This news was enough to spur the gloomy commodity markets into action. Also
the latest indicator from China suggests that manufacturing activity held steady
last month. A more active China would be a great help to the world economy.
Meanwhile, the markets here are waiting for the February employment report
due on Friday. Expectations are fairly gloomy. A better than expected report
would be a real tonic. We continue to expect better market performance as we
move into Spring.
There is no change in our recommended allocations
New Fund Ratings – For domestic stock funds, Westport Fund R
is now rated Buy. For international stock funds, three funds are now rated
Buy: Fidelity China Region, Matthews China (for Venturesome investors only)
and USAA World Growth. Oakmark International is now rated Sell.
The Stock Market – We have been talking about an oversold rally
and today’s rally can be seen in that light. We shall see. We believe
there is a reasonable chance that this rally can have some follow-through.
Partly it depends on Friday’s numbers. There is a great deal stirring
in the stimulus pot. We continue to believe that the market is in the process
of forming a bottom.
The Bond Market –
The Select Portfolio – There is no change for this portfolio.
The next Hotline is scheduled for Wednesday, March 11.
