2009 Outlook The Bottom Line CoreStates remain positive about the ability of the U. S. and international investment markets to provide patient investors with favorable, inflation-beating, long-term returns. But, we also believe the changing priorities of our government and of other administrations worldwide can make our future economic prospects decidedly less favorable than they have been. The following points highlight what we see for 2009 in the major areas pertinent to investors.
Economy – The global downturn will continue, and is likely to worsen through 2009 and possibly much longer as governments and financial institutions worldwide attempt to limit its severity at the expense of extending its duration. U. S. unemployment will rise well above 7% and production will decline markedly as businesses attempt to align their output with shrinking demand.
Inflation – The widespread actions of governments and financial institutions to support over-extended borrowers with additional More >
2008: CoreStates Second Quarter Commentary
The Economy: Many people believe that the US economy has entered a recession. The technical measurement of a recession is two consecutive quarters of the Gross Domestic Product showing negative numbers. A recession has not been indicated by this measurement. However, we have experienced three consecutive months of negative net job growth, the dollar continues its decline while commodities, food and fuel prices continue their upward spiral. What does this mean in terms of a recession? While consumers are forced to put more dollars into food and fuel, one must ask, what other elements of their spending patterns will suffer and how will this affect the economy?
The once robust housing market remains stagnant. Credit and liquidity problems continue their drag on the domestic stock markets. Corporate earnings for the first two quarters of 2008, by most measures, have been More >
Third Quarter 2008 Commentary
The Economy As the third quarter began, it looked like ‘more of the same’ – gradually slowing growth, rising costs for businesses and individuals, and the complex but apparently manageable unwinding of the nation’s multi-year debt binge and resulting housing-related boom/bust. This view proved to be largely accurate through June and into July as energy and commodity prices peaked and key measures indicated meaningful economic slowing. But, by mid-July, it was becoming evident that the nation’s and world’s financial system ills were much more serious than initially perceived. Fannie and Freddie, the government-sponsored entities created to expand home ownership, were declared essentially bankrupt and the government’s implicit guarantee of their paper was made explicit. Merrill Lynch was folded into Bank of America, Lehman Brothers entered liquidation, and AIG was effectively nationalized.
In spite of all these truly unprecedented actions, by More >
By Larry Halverson
So, how bad was 2008?
For many markets, 2008 was the worst year on record. The broad MSCI World Stock Index recorded a loss of -42%. Formerly booming stocks in China, India, and Russia fell roughly -50%, -65% and -70% respectively. U. S. stocks fared better, but still saw declines of -33% for the Dow, -38% for the S&P 500, and just over -40% for the NASDAQ (capped by fourth quarter declines of -19%, -22%, and -24% respectively). This NASDAQ loss in 2008 exceeded even that of 2000 when it dropped -39.3%, making this the worst year in NASDAQ ‘s nearly 40-year history. For both the S&P 500 and the Dow, 2008 was the third worst year on record. Although the expectation of a snap-back following such declines seems reasonable given the market’s propensity to “revert to More >