Enough, Already

After the rescue package, then what?

Many observers note that the rescue package that came out of Congress last week was no panacea. They cite tightening global credit, a run on money market funds, and a lack of interbank lending as symptoms of a sick financial system that is starting to infect the real economy.

Good companies like Harley Davidson or John Deere are having a hard time getting short-term credit. This makes it hard for them to finance customer sales. It may be part of the reason we saw a decline of 150 thousand jobs in Friday’s employment report.

But enough is enough. The bond market, usually pretty rational, is pricing solid A-rated industrial companies at a 50% chance of default. Even AAA Johnson & Johnson debt is priced at a 30% probability. That’s too pessimistic, even in a recession.

There’s no question that the people who deal with markets on a daily basis are rattled. And I don’t blame them. But one man’s trash is another man’s treasure. And the time to buy is when the blood is running in the streets.

Douglas R. Tengdin, CFA
Chief Investment Officer
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By | 2014-09-04T13:35:19+00:00 October 6th, 2008|Global Market Update|0 Comments

About the Author:

Mr. Tengdin is the Chief Investment Officer at Charter Trust Company and author of “The Global Market Update”. The audio version of each post can be heard on radio stations throughout New England every weekday. Mr. Tengdin graduated from Dartmouth College, Magna Cum Laude. He received his Master of Arts from Trinity Divinity School, Magna Cum Laude and received his Chartered Financial Analyst (CFA) designation in 1992. Mr. Tengdin has been managing investment portfolios for over 30 years, working for Bank of Boston, State Street Global Advisors, Citibank – Tunisia, and Banknorth Group. Throughout his career, Mr. Tengdin has emphasized helping clients manage their financial risks in difficult environments where they can profit from investing in diverse assets in diverse settings. - Leave a comment if you have any questions—I read them all! - And Follow me on Twitter @GlobalMarketUpd

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