Harry Rady Online – San Diego, CA

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.

As one of the sectors viewed in today’s economic climate as non-essential, the gaming industry is suffering sluggish sales and a shrinking market. WMS Industries, a company that manufactures slot machines, has paradoxically experienced a surge recently in its stock’s value, increasing company earnings, while becoming more efficient, and increasing its market share despite the general decline in the gaming market. There are some market analysts that predict that WMS will soon overtake International Game Technology as the industry’s leader.

Not all analysts agree, however. Harry Rady of Rady Asset Management believes that the stock has already absorbed the effect of WMS over performing.  According to Rady,

“A slip backwards in results could send the stock tumbling.”

The expectation of new slot machine purchases by the casino industry is declining, according to a UNS survey. It was found that only 22% of game managers are planning on ordering new equipment this coming year, compared to close to 50% last year.

In an appearance in the CNBC Video “Making Sense of the Markets” Harry Rady of Rady Asset Management, along with two other guests, give their analysis of recent market trends and advice on how to best product assets in the future economic uncertainty we are facing.

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.

In an interview which took place on April 13, 2009 with Maria Bartiromo on the CNBC financial news program “Closing Bell”, Harry Rady of Rady Asset Management discusses his firm’s re-entry into investments in the financial sector after an 18 month hiatus. Explaining that he believes there is too much risk at the moment to invest in individual companies; Rady Assets began investing about 6 weeks ago in the “ultra-financials” such as ‘UYG-ETF.’ Believing that there is not enough “clarity on what’s the balance sheets of these companies” to take more of a risk on them. Enjoy the complete interview here.

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.”

Frustrating a six-week Wall Street rally, the stock market suffered a 3.5% loss last Monday, April 20, 2009. The recent decline in the Dow Jones Industrial Average on Monday will be the worst one day decline since the beginning of March when the Average reached its lowest point in 12 years.

Adding to the downturn was a 23% drop in Bank of America. Despite announcing a net income increase in the first quarter of more than triple, including the purchase of Merril Lynch recently adding more than 3 billion dollars to its bottom line, B of A still experienced a net loss due to a rise in “charge-offs” and huge losses in its credit-card business.

For more complete discussion of this issue you may follow the link to: ‘U.S. Stocks Lower as Banking Concerns Lead to Broad Sell-Off.’

In what many see as a continuing indication that the economy will be heading down a bit more before it makes its eventual recovery, U.S. stocks dropped precipitously last Friday, ending the second consecutive week of losses. Pressured from record breaking drops in retail sales and falling sales of mobile phones, the stock market has economist and investors in a blue mood indeed.

Responding to calls for the government to bailout ailing businesses, Harry Rady, CEO of Rady Asset Management,  ventured his opinion on taxpayer funded bailout schemes for the overextended auto manufacturing industry.

“Even if they are given some capital, it’s a band aid. The Japanese and the Germans have much better business models and products. The free market should determine who makes the best cars, and the consumers should determine who survives.”

To read more about this issue please follow the link to:
MarketWatch.com: U.S. stocks slammed again as retail sales drop