Welcome to the February 2008 issue of Condor Monthly!
Tyco Class Action Lawsuit
As mentioned in prior communications, our current policy is to file appropriate materials to participate in class action lawsuits if the recovery is anticipated to exceed $50. Last year, we filed materials to participate in a class action lawsuit against Tyco International, but were recently notified that some clients have received Rejection Notices. If you received such a notice, please forward it to us immediately so we can take corrective action.
Please continue below to view the "From the Portfolio Manager," and "Financial Planning Corner" segments in this month's issue.
From the Portfolio Manager
Slower Growth Is A Greater Threat Than Prices
These days, Federal Reserve policy makers are more concerned about the prospects for an economic slowdown in the U.S. as opposed to inflation. In a speech at the University of North Carolina on February 26th, Federal Reserve Vice Chairman Donald Kohn said turmoil in the credit markets, and the possibility of even slower economic growth, pose a greater threat than inflation. “I do not expect the recent elevated inflation rates to persist,” Kohn said. He added, “the adverse dynamics of the financial markets and the economy have presented the greater threat to economic welfare in the United States.”
Then, on February 27th, during his semi-annual testimony on the economy before the House Financial Services Committee in Washington, Federal Reserve Chairman Ben Bernanke stated that “the Federal Open Market Committee will be carefully evaluating incoming information bearing on the economic outlook and will act in a timely manner as needed to support growth and to provide adequate insurance against downside risks.”
These dovish comments follow some rather gloomy economic figures such as a 5.3% decline in January durable-
goods orders, contracting manufacturing activity, and continued weakness in the housing sector. The Fed has tried to offset some of the impact of the worst housing recession in 25 years by slashing the benchmark interest rate 2.25% to a 3-year low of 3% since September 2007. The next Fed meeting is March 18th. Treasury futures currently indicate that traders put the odds of another 50 basis point cut at about 90%, with just a 10% chance of a 25 basis point move.
goods orders, contracting manufacturing activity, and continued weakness in the housing sector. The Fed has tried to offset some of the impact of the worst housing recession in 25 years by slashing the benchmark interest rate 2.25% to a 3-year low of 3% since September 2007. The next Fed meeting is March 18th. Treasury futures currently indicate that traders put the odds of another 50 basis point cut at about 90%, with just a 10% chance of a 25 basis point move.
Clearly, the Fed is poised to move as aggressively as necessary in order to prevent a severe recession. While it is impossible to know exactly when the economy, or the stock market, will bottom out, the second half of 2008 could be rosier for investors. First of all, year-over-year corporate earnings comparisons look much easier. While earnings for the first half of 2008 are expected to be slightly negative versus 2007, second half earnings are expected to rebound nicely. Additionally, the Fed’s rate cuts will have had time to filter through the economy (there is typically a 6-month lag from the time policy is changed), and investors may look forward to what should be a less rocky 2009, when earnings are expected to grow about 13%. Since the stock market is traditionally a forward-looking indicator, equities may very well rally in anticipation of better times ahead, even if the current economic numbers still paint a weak picture.Financial Planning Corner
Consumer's National Do Not Call Registrations Will Not Expire
The Federal Trade Commission (FTC) defines telemarketing as a plan, program, or campaign to sell goods or services over the phone. Telemarketing can offer a convenient way to buy products and obtain services. However, many Americans view these unsolicited calls as an annoyance. As a result, Congress has enacted statutes that regulate the practice of telemarketing.
The National Do Not Call Registry was created in 2003 to give U.S. consumers an opportunity to limit the telemarketing calls they receive. When the Registry opened, the Federal Trade Commission (FTC) adopted a five-year re-registration mechanism so that the Registry would periodically purge disconnected or reassigned numbers. This was done to ensure that the Registry was as accurate as possible. For consumers who signed up with the Registry in the first year, this meant that their registrations would expire in 2008.Fortunately, registrations will not expire and consumers will not have to re-register. In October of 2007, the FTC provided testimony before the House of Representatives citing the great success and popularity of the Registry. Based on the fact that the Registry has implemented a "scrubbing" program that removes disconnected and reassigned numbers each month, the FTC decided that it will not drop any telephone numbers from the Registry based on the five-year expiration period. (Note this is pending final Congressional or agency actioon whether to make registration permanent).
For more information on registering your number to eliminate unsolicited telemarketing calls, see the Do Not Call website https://www.donotcall.gov/.
Stat Bank- Interesting Statistics
