Harry Rady Online – San Diego, CA

In light of the Obama administration’s apparent backing down from the sweeping reforms it originally proposed to a more moderate health care reform package Maria Bartiromo of CNBC asked Harry Rady of Rady Asset Management and Barbara Ryan of Deutsche Bank Securities to respond. Listen to the video below for the full discussion.

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In mid June the stock market seems to be choosing a direction as the three month gain of 39.9 percent in the S&P index falters. After reaching a 12 year low on March 9, 2009, the stock market has been making an Olympian recovery which, according to many analysts, should have taken years to achieve instead of the gold medal-winning three months.

As the blitzkrieg rise began to slow investors and traders continued to (unsuccessfully) look for new signs of other economic strengthening.

After several comments made by the Russian finance minister, the dollar began to rise in comparison with other currencies. The stronger dollar forced prices for oil and other materials down, bringing to a halt the increase in prices recently of these energy and materials stocks.

Harry Rady is not surprised.

“The market just seems to keep driving the car into the wall and then wonders why it can’t keep driving,” Rady said.

As the dollar strengthens the prices of commodities, oil and other materials are heading downward. According to Harry Rady of Rady Asset Management, the recent surge in stocks has been too fast compared to the poor state of the economy.

“The market just seems to keep driving the car into the wall and then wonders why it can’t keep driving,” Rady said.

After deep drops in prices of stocks in Europe and Asia in response to the strengthening dollar, prices of commodities and other materials declined.

An additional blow came when the index of manufacturing in New York showed that demand was also faltered in the months of May and June.

Commenting on the market’s latest showing Harry Rady of Rady Asset Management said,

“Everything is overpriced. A very long, protracted recession is still very much alive.”

This remark was reported in an article in Lubbock On-Line in response to a week of see-saw movement of the major markets including the Dow Jones industrial average. The Dow along with all the other major market indicators, finished the five days ending on May 23rd just barely in the black. The Dow, S&P and Nasdaq rose 0.10, 0.47 and 0.71 percent, respectively.

Despite a good showing on Monday, stocks sunk downward the rest of the week in response to some bad economic news. Re-running a pattern that is now only too familiar, early gains on Friday were neutralized by sustained losses in the last hour of trading.

The choppy trading waters were caused by announcements that unemployment could reach as high as 9.6 percent and that the British government could lose the Standard and Poor’s Triple-A credit rating.

Coming at the end of next week are several economic indicators that will help determine whether the markets will be sustaining their rally of early spring, or rather if they are instead a disappointing indication of more bad times to come. These barometers include reports of home sales, orders for manufactured products and consumer confidence.

Speculation that the Obama administration is considering converting some of the preferred stock which it has obtained as a result of recent bank bailouts into common stock has added to investors already overburdened accumulation of worries.

The conversion of preferred shares to common stocks will give the administration more freedom to further aid the stressed banking sector without stressing the government’s financial situation, i.e., there would be no need to allocate additional funds. However this move would simultaneously dilute the value of already existing shareholder’s common stock, thus adding to the market downturn.

Read more on this issue in the full article: “U.S. Stocks Lower As Banking Concerns Lead to Broad Sell-Off.”