This is The Wall Street Digest Hotline Update for Tuesday, July 31, 2007, at 6:00 p.m. EST.
Stock prices turned lower in the afternoon when news surfaced that American Home Mortgage might liquidate assets after failing to meet its margin calls. At the close, the Dow dropped almost 149 points, to close at 13,209, while the Nasdaq fell 37 points, closing at 2,604. Oil closed up $1.38 to $78.21 per barrel, and gold closed up $2.70 at $679.30 an ounce.
Tame inflation in June, with consumer confidence at a six-year high, helped push stock prices higher intraday after an impressive gain on Monday. Second-quarter profits continue to beat analysts' expectations. Global liquidity is still at record levels. The global boom is on a solid track. Stay fully invested.
I still believe this market will continue to rise into year-end. The Fed is definitely on hold for the remainder of 2007. Fed Chairman Bernanke does not expect housing to bottom this year. Real estate is an illiquid, high-risk investment! Do not look for real estate bargains. Renting is cheaper than owning.
Do not forget that record global liquidity of $5.24 trillion is driving global growth and profits. The dollar has fallen to an all-time low against the euro, and a 26-year low against the British pound. A falling dollar will continue to enhance the return of your offshore investments. Consequently, you should remain fully invested, with at least 50 to 75 percent of your portfolio allocated to our recommended global/international investments. Stay close to our telephone/e-mail/website Hotline Updates.
The next Hotline Update will be on Friday, August 3, 2007, at 6:00 p.m. EST.