TUESDAY FEBRUARY 16, 2010

Watch the Trend

The equity markets continue to gyrate while going nowhere.  Despite all the negative news out of Europe last week, the markets ended the week essentially flat.  It seems just a week or so ago the markets were bordering on a "correction", being off by roughly 8%, and with many a talking head calling for a 10%-20% correction.  Certainly, there was no shortage of bad news, with Greece headlining the sovereign debt parade and continued high unemployment in the U.S.  Yet, the markets have shown great resolve.  Why?

As this blog has discussed for quite some time now, the underlying economic trend continues to improve.  The hot money is focusing on commodities and currency trading, and I emphasize trading.  For long-term investors, there are plenty of healthy signs.  Corporate earnings have come in much better than expected and have the potential to rise significantly with a little revenue growth.  The Federal Reserve Bank of New York released a better than expected Empire State Index which measures manufacturing activity in New York Metro area.  Also, this morning the Simon Property Group, the largest shopping mall owner in the U.S., announced a $9 billion offer to buy the stressed General Growth Properties.  Simon Property must see an improving economic environment if they are willing to buy out one of its distressed competitors.  A $9 billion offer for a near bankrupt company, in real estate no less!  Finally, Darden Restaurants, owners of the Red Lobster and Olive Garden, announced very strong earnings and increased guidance going forward.  What better measure of the confidence of the average joe then eating out at Red Lobster?!

POSTED AT 1899-12-30 13:05:00.0

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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