LSA Connect

Brad Kasper, President and Chief Investment Officer

Late Friday night (August 5th) Standard & Poor’s announced that the coveted U.S. debt rating of AAA was reduced to AA+!  It is the first time in the history of the United States (since ratings began) that it’s been less than AAA. While Standard & Poor’s announced their downgrade two other independent rating agencies, Moody’s and Fitch, confirmed their AAA view of our U.S. credit and are currently maintaining their positions.

Why then did Standard & Poor’s decide to drop our vaunted AAA? According to a Standard & Poor’s director, Congress and the White House took too long to raise the debt ceiling and the amount reached to reduce the debt was too small. Standard & Poor’s did however confirm our A-1+ short-term rating (highest available) and removed both the short-term and long-term ratings from credit-watch! Both of those ratings were placed on credit-watch on July 14, 2011 with negative implications. Continue reading →

Brad Kasper, President and Chief Investment Officer

Major stock market indices were down 4-5% yesterday as investors move into panic mode.  There is no single piece of news driving the sell-off; rather the market seems to be gathering downward momentum on its own.  Selling is creating more selling.

The recent selloff is reminiscent of 2008 and 2009 where the markets are hanging on every bit of data that transpires creating large daily market swings.  To give you a few quick facts about yesterdays move: Continue reading →

Brad Kasper, President and Chief Investment Officer

The equity market in the US today is down nearly 1000 over the last couple of weeks (as we write this the Dow is down some 300 points or 35 S&P 500 points). The news is claiming this is due to a report on initial jobless claims. This is balderdash. A slight miss on initial jobless claims isn’t worthy of a bad day in the market. What we think is going on is a lot of folks trying to position themselves ahead of the Employment Report due tomorrow morning. The Employment Report is the most volatility inducing statistic of the month and lately has been worse than forecast. So, given the backdrop of weak economic numbers, a weak Employment Report wouldn’t make for a good session. Continue reading →

Given our expectations for the economy, here are some thoughts on the markets….

Attractive equity market valuations (recall the P/E slide) and less overall volatility for the U.S. stock market (recall the VIX slide) would normally call for an overweight in stocks.  However, a modest economic growth environment and uncertainty overseas makes the case for a more defensive allocation.  Taken together, we are keeping a neutral allocation to stocks, bonds, and cash. Continue reading →