Freddie Mac Roils Market

History may prove otherwise, but at this juncture, it seems the conventional wisdom about which GSE to worry about was misguided. Then again, some have always contended both GSEs posed big risks to the financial market's health.

Monday's action in both stocks and fixed-income suggests that such concerns have not been quelled.

Tide High, This Bull Holding On

I've received quite a few emails recently from readers asking for an update on Bob Brinker, editor of Bob Brinker's Marketimer. Anecdotally, that suggests more interest among retail investors, to whom his newsletter and radio show are geared.

As reported here, Brinker made a staunchly bullish call on March 11, projecting the S&P 500 would rise at least 25% -- nearly exactly the gains registered between March 11 and June 5.

Over the weekend, Brinker issued an update to subscribers, writing: "Monies invested at these levels are subject to increased downside risk in the event a retracement of the market rally occurs."

While that truth is self-evident, it should not be construed as wholesale change. Brinker believes the S&P has the potential to exceed 1000 "by a comfortable margin going forward."

Cyclical bull markets within the secular bear market of 1966 to 1982 lasted from one to three years and produced gains with a median advance of 54%, he wrote. "These percentages leave the door open to significant upside potential [in the current environment], depending on the length and breadth of the next economic recovery."

Brinker foresees "moderate" economic growth in 2004, largely on the basis of high levels of fiscal and monetary stimulus, plus "a de facto policy of allowing the U.S. dollar to decline," which should aid U.S. exporters. The market timer took heart that first-quarter GDP and corporate earnings were better than expected, while conceding the economy needs to start adding jobs rather than shedding them and capacity utilization must increase before a "genuine economic recovery" occurs.