THURSDAY OCTOBER 29, 2009

Gyrations

The market continues to gyrate.  This morning’s better than expected GDP report, up 3.5% in the 3^rd quarter, allowed the market to erase all of yesterday’s loss.  Yesterday, it was disappointing housing and confidence numbers that set the market back.

I continue to believe the easy money has been made in the equity markets.  The recovery from the Armageddon trade has fueled the markets.  Going forward, the market needs to see improving economic numbers and corporate earnings.  The better than expected 3^rd quarter earnings have helped.  80% of companies have beaten the street.  However, the earnings reports have raised some questions about the sustainability of the market rally.  Yes, the earnings season has been strong, but the earnings continue to driven by cost controls.  The market’s recent gyrations seem to be questioning the ability of companies to grow the revenue line.  On that front, today’s strong GDP provides some hope.  But even the GDP sustainability is in question.  While strong, much of the GDP in the 3^rd quarter is distorted by one time factors such as “cash for clunkers.”  The economic consensus calls for a weaker 4^th quarter.

I continue to believe the markets will continue to climb the wall of worry, grudgingly going higher.  But expect some volatility in the near term as the economic picture develops.

POSTED AT 1899-12-30 16:53:00.0

KEN ENTENMANN, CFA
SENIOR VICE PRESIDENT AND
THE DIRECTOR OF INVESTMENT MANAGEMENT SERVICES

Ken is a Senior Vice President and the Director of the Trust and Investment Services at Alliance Bank, N.A. He has 23 years of investment experience and oversees the management of assets totaling $1 billion. He holds a B.S. in Applied Economics and Business Management from Cornell University and an M.B.A. from the William E. Simon Graduate School of Business Administration at the University of Rochester. He has also earned his Chartered Financial Analyst designation. He is a member of the Executive Committee of the Trust Division of the New York Banker's Association. He is also a director of the Central New York Community Foundation.

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