Harry Rady News

The middle of July was a difficult time for investors. After 8 weeks of general improvement, the market dropped 187 points in just one day of trading, the largest single day point drop since April 20. Confidence that the spring rally was for real was badly thwarted, as all the major indexes declined over 2%.

Trading in oil has been mostly keeping pace with the stock market’s ups and downs these past three months. So it was no surprise that the price of benchmark crude oil fell $1.42 in July, reaching $70.62 per barrel on the New York Mercantile Exchange. The price of crude has fallen almost 3% during just two days of trading in mid-July.
These events were not a surprise to Harry Rady of Rady Asset Management.

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

Signs that the surge in stock prices experienced over the spring months continue. The Dow Jones fell 187 points last Monday, which is the biggest one day drop since April 20. The other major indexes also fell more than 2%.

Since there was not much trading volume, the loss is explained as due to a shortage of buyers rather than a large number of sellers, suggesting a hesitancy to get involved in the market until there is more clarity as to which way the market is actually heading.

It is clear that stocks have been rising too quickly considering the trouble our economy is still in, according to Harry Rady of Rady Asset Management.

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

Discussing the “stress test” recently conducted on U.S. Banks, Harry Rady expressed doubt as to whether the results and data gleaned will restore public confidence in the banks. Rady, during his interview on “Closing Bell” the CNBC Financial news program, explained that although it is a positive step to have additional “data” points and increased transparency, he was doubtful that there is much relevance to the results of the stress test.
To listen to the full interview, follow the link to: Closing Bell.

In order to “Make Sense of the Markets” Harry Rady of Rady Asset Management, Quincy of The Hartford;  and Jim McCaughan of Principal Global Investors all appeared on the following CNBC Video. “Preparing your portfolio for next week, asks the above mentioned experts to analyze the market trends and advice on how to proceed into the future. Watch the video and glean some of their wisdom.

Harry Rady of Rady Asset Management discusses his apprehension concerning the stress tests that government regulators are subjecting financial institutions to during the present economic downturn that the United States is facing at the moment.
Rady’s first concern is that the regulators don’t really have the “big picture” in mind. He believes that the stress tests are too homogeneous and rely too heavily on quantitative metrics.
His other concern is that there is a built in conflict of interest between the regulators, shareholders and management. The job of the regulators is to make sure that the companies stay solvent and that the flow of capital is unobstructed. They are not doing anything to protect the interests of the shareholders.
Listen to the entire interview now.

Taking some of the wind out of the sails of a 6-week market upturn, a wave of sell-offs in small capitalization stocks seems to have returned investors to the skittish mood they have been experiencing of late.

Banks seemed to have set the tone last Monday for small caps. Despite the fact that larger banks such as Bank of America have posted better-than-expected gains in earnings, smaller, regional banks, which operate differently than the larger, national banks, did not do nearly as well.

Adding to the already nervous mood of investors, the smaller banks traditionally depend more on real estate and construction loans whose sectors are suffering disproportionately in the current economic climate.

Because “charge-offs” are much higher than what had been anticipated, there will be a erosion in book value and reported earnings for the regional banks as a whole.

For further analysis you can read more in: ‘US Small Caps Close Lower on Slide for Regional Banks.’