It seems that the volatility in the stock market has continued our roller coaster of ups and downs this past quarter. Can this continue? Well it seems that it will with the daily changes of positive and negative news in Europe. As of last week the announcement has come! The European Central Bank has decided to bail out Greece and the markets have responded favorably. The key points are the Greek debt being held by private sector creditors will be cut by 50% with investors accepting a ‘voluntary’ 50% haircut. Furthermore, European’s biggest banks will be required to increase their core capital ratios by 9%. The leaders have also agreed to a 440 billion Euro zone bailout fund to help the faltering countries. This may not have happened as quickly as the markets needed, but it has certainly put a positive spin on the outlook for the rest of the year.
After one of the worst 3rd quarters we have ever seen, October saw a rally recapturing about 12% of the losses. This may be the beginning of great things to come. Earnings reports have started to come out and for the most part, they have exceeded expectations for many Fortune 500 companies. Apple (AAPL), Amazon (AMZN), and VF Corporation (VFC) have been the biggest gainers in our portfolio over the last few months and we are going to continue to be bullish about these holdings and several others as we head into the retail holiday season. Retail sales did rise by more than what was forecasted at 1.1%. This creates some contradiction in the reports that consumer confidence is dropping. Regardless, this rise in retail sales is the most in seven months and the widespread concerns about the economy falling back into a recession have dissipated.
The September jobs report did bear some good news. We created another 103,000 jobs in September. Much of this was due to 45,000 striking telecommunications workers coming back to work. These new jobs were mostly in the areas of professional and business services, health care, and construction. In conjunction, the private sector added 91,000 jobs as well. The unemployment rate remained unchanged at 9.1%. Housing continues to try and find a bottom and we can only hope that we are nearly there. While this was a very disappointing quarter, it seems that good times are ahead. If October is any indication we should finish 2011 on a strong note. Happy Holidays!