For Our Valued Clients
Current Investment Outlook
April 2008
Back from the Abyss
Many investors contend that the Federal Reserve’s March 2008 historic intervention to restore confidence and liquidity to the global capital markets was a seminal event, representing a distinct turning point for global equities. While the risk of a systemic meltdown has probably been avoided, we feel that the problems of excess leverage, falling asset values, frozen credit markets and overextended US consumers remain largely unresolved. Further, we believe that analyst estimates for double digit gains in SP500 earnings are too optimistic and may have to be revised down during the summer months. Our sense is that the notion, however tempting, that we are at a “bottom” lacks sufficient perspective, not taking into consideration that this credit contraction could be very different from past recessions.
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