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The Weekly Three
…for two weeks
October 7
th
-20
th
James CullenPortfolio Manager
More of the Same, with a Twist
–Credit: Scarce and Expensive –Global Slowdown Reality, But Not Priced In Yet
•Themes for Last Two Weeks
1. Unprecedented Credit Market Stress as GlobalSlowdown Thesis Gains Traction
•S&P Down Another 11% to 940 (-25% 1 Mo.)
2. Governments Scramble To Do Some/Anything3. Warren Buffett Positive On & Buying Equities
Credit Market Stress
•Sorry Fixed Income is Boring – But It’sDriving Equity Markets•A Spread Problem on Short Duration
–3 Mo. LIBOR @ 4.4% vs. 5.2% 1 Yr. Ago –3 Mo. Treasuries @ 0.7% vs. 4.0%
•Borrowing Costs Down 20%•But Risk-Free Return Down 80%
Who Can/Will Take More Risk Now?
–We Can. Will We?
For more info and several graphs, visithttp://collegeanalysts.com/creditstress
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