perspective from citi in email rec'd today (though from last week), they're stickin to it for now:
Dear Valued Customer
RE: Market Commentary
A number of issues weighed on the equity markets Thursday (July 26, 2007), sending the Dow Jones Industrial Average
(DJII) down 311.50 points (-2.26%) and the S&P 500 Index down 35.43 points, for a 2.33% loss on Thursday. The technology
laden Nasdaq Composite dropped 48.83 points, or 1.84%. In the view of Citigroup Analysts, continued concerns about the
credit and mortgage markets, further deterioration in the housing market, and rising oil prices appeared to be the major
drivers of markets’ broad-based sell-off. Market breadth was decidedly negative today, with the number of declining issues
outpacing the number of advancing issues by more than 15-to-one on the New York Stock Exchange. Thursday’s (July 26,
2007) market decline marks the 29th 100 point move in the Dow thus far this year, fast approaching the total for 2006 of
33. The “VIX Index,” a commonly used measure of volatility, registered its highest reading since June of 2006. Treasury
markets, in a “flight-to-quality,” rallied on the same day driving the yield on the 10-year Treasury note below 4.8%.
Credit market fears continued to trouble investors today, in Citigroup Analysts’ opinion. It appears the main source of concern
is that increased risk aversion and more restrictive credit markets could have a dampening effect on M&A activity, making
deals tougher to pull off. Two large leveraged buy-outs (LBOs) were put on hold on Wednesday (July 25, 2007), and there is
concern that there will be fewer future deals due to financing difficulty, in our view. New home sales were lower than expected
in June, falling 6.6% versus consensus expectations for a 2.7% decline. Weaker-than-expected second quarter earnings
from a number of homebuilders further supported the view that any significant recovery in the housing market may be
forestalled. Crude oil prices continued to rise on Thursday (July 26, 2007), reaching just shy of $77 per barrel. In the view
of Citigroup Analysts, recent uneasiness over a slowdown in consumer spending was magnified, given the negative housing
data and higher crude prices.
Although credit concerns, the housing market, and a potential consumer slowdown are all risks that investors should not
ignore, we believe the market will ultimately be supported by a number of factors, including solid corporate balance sheets,
relatively attractive market valuations, strong free cash flow generation, rising income levels, low unemployment, and
moderating inflation. Although we expect markets to remain choppy, we believe the potential exists for further gains in the
equity market by the end of the year and into 2008. Our year-end target for the S&P 500 is 1,600 and our year-end target
for the Dow is 14,400. The S&P 500 currently trades at approximately 15.7x our 2007 and 14.6x our 2008 S&P 500 operating
earnings (pre-writeoffs) forecasts of $94.75 and $101.75, respectively. Our mid-year 2008 targets for the S&P 500 and Dow
Jones Industrial Average are 1,725 and 15,500, respectively. This implies approximately 14% upside from current levels over
the next 12 months.
Yours sincerely
Andrew Chia
Managing Director
Investment & Treasury Services
International Personal Bank
well as far as education goes in bali, What everyone needs an education?, great everyone get a Phd. to work at the warung or gas station. Somebody has to "not" get an education. Like me (look at my grammer)