Shopping the Market with John K. Lynch
By Marilynn Bowler
          
Bringing an astute and well-respected Market Analyst to address the Rotary Club of Charlotte was an act of brilliance. With membership including some of the Charlotte area's brightest investors and certainly some of our city's keenest financial experts, a top-notch investment strategist was a perfect fit to speak to our club. Thanks to John Armistead, Financial Advisor with Wachovia Securities, John K. Lynch - Evergreen Investments' Managing Director and Chief Market Analyst - brought his impressive analytic skills before our club this week and captured the rapt attention of his audience throughout his entire presentation.
  
The native New Yorker and his wife Linda, who is Charlotte-born, have two children. His bio describes Lynch as using a "top-down, macro-economic approach in his analysis of the financial markets." That's putting it mildly. The man is a financial wizard, using what seems to be magic in terms of cutting through the clutter of what some consider "market mumbo-jumbo mixed with commodity and economic indicator lingo" to communicate his message in clear and concise terminology. In short, he talks a language easy to understand.
  
Having joined Wachovia in 1996, John was Chief Investment Strategist at IJL Wachovia and Chairman of the Investment Policy Committee, as well as portfolio manager of the Model Stock Portfolio. In November 2001, John assumed his current position at Evergreen Investments. We can credit his ten-year experience in New York, working in the securities industry focusing on equity strategy and portfolio management, with the background that has elevated him to the position he holds today. And, lest we overlook their important role in his success, a BA from esteemed Villanova University and an MBA in finance from The College of William and Mary probably deserve high mention, as well.
  
Citing a flexible U.S. economy with still-fully-employed households wherein 95% of us are working, first half profits for 2007 coming in well above projections, and financial markets which had strongly rebounded in September - supported by an easing of monetary policy by the Federal Reserve - our speaker today left our members feeling somewhat optimistic, albeit wary, at the end of his concise and well-documented Market Outlook. He moved easily from topics such as current market performance to the U. S. economy to fixed income and then to equities.
 
Cutting from the September stock rally, to strong global growth boosting the prices for oil, gold and other commodities, to the housing dilemma ("Housing is in recession," he said,) to his cautionary remarks in the area of subprime mortages, to his take on some economic strengths to emphasize the resilience of the U.S. economy, John capsulated - in fifteen minutes - a month's worth of market reports. He forecasted that October 31st may be a "scary day" and, in a sentence, sees inflation a probable for the year 2008. He did hint at the possibility of a recession in 2009 depending on a number of variables including tax rates, fiscal and monetary policy, and whether or not China moves to a floating currency. When it comes to the outlook for earnings, he feels they are reasonably healthy for many sectors of the economy - S&P 500 earnings growth should be in the 6-8% range - and he noted that the housing slowdown is being mitigated somewhat by capital spending on productivity enhancing technology. Growth in equity prices generally follows the corporate earnings trend, so John feels the market will likely be higher at year end (perhaps S&P 500 approximately 1600 vs. 1500, today.)
  
He introduced us to terms such as "Moral Hazard" and reminded us that we must keep our perspective when dealing with a queasy market. He spoke of Secretary of the Treasury Henry Paulson, Jr., referencing his remarks about China and a fear of the loss of China as an engine of global growth and market for American exports.
  
All-in-all, John did a great job of addressing a number of issues and we appreciated his insight. Charlotte has a crown jewel in John Lynch as it pertains to market analysis. Should we buy or sell? Is a recession in the works? What about the future of the American economy … will it expand or decline? Advise us about bond yields and P/E multiples. "Wachovia pays me to worry," he told us. Excellent, we thought. That worrying is in good and capable hands.
   
For a complete Market Outlook by John K. Lynch, go online to www.evergreeninvestments.com and click onto Quarterly Market Outlook.
      
Head Table: Bill Allen, Tom Hodges, David Zimmerman, John Armistead, Mike Hummer, Tyler Ream;
Invocation: Meg McElwain;
Visitors & Guests: BG Metzler; Health & Happiness: Tigger Alexander; Song: Gregg Walker; Piano: Thomas Moore

• Sympathy is extended to our Rotary family: Charlie Williams lost his wife, Totsie, on October 1st and Tebee Hawkins lost his wife, Dot, on October 6th.
     
• Leland Park has been suffering with tremendous back pain and will have surgery on Thursday. Wishes for a speedy recovery, Leland!

• Carol Jordan presented an update and power point presentation on progress at the St. Xavier's School Godavari. In 2006-2007, Charlotte Rotary partnered with Rotary Kathmandap in Bagmati, Kathmandu, Nepal to secure a matching grant from Rotary International for $18,055 that was used for books, reference sources and computers for the library. Carol also introduced Asha Amatya, whose brother, Prachanda Bahadur Shresta, served as the primary Nepal contact with the project; President David expressed thanks to Alan Adler and all who worked on the golf tournament. Alan will give a more in-depth report next week.

• FLU SHOTS will be given next week, October 16th. OK to bring your spouse. Cost is $25 (Medicare Card can be filed with copy of the card). 11:30 - 12:30 and 1:30 to 2:00. Reservations are not necessary.

• Rotary Foundation Banquet will be November 8 at the Sheraton Airport Hotel. See Sandy to purchase your tickets: $36
 
THINGS TO REMEMBER
 
• Host Dinners:
DATE October 13 HOST Steve Meckler GUESTS Sammy Black, Sheila Cottringer, Jeff Searcy
DATE October 18 HOST Katie Tyler GUESTS Alan Barnhardt, Mark Norman, Bill Stegelmeyer, Gene Marx, Tom Hutchins, Gail Norman
DATE October 27 HOST David Anderson STILL NEED 4 couples
 
• Trip to Asheboro Zoo: DATE October 20 CONTACT Chris Kemper (704-943-2113) TICKETS are free to first 4 or 5 families
 
• EXCELLENCE IN LEADERSHIP AWARD will be presented November 27, 2007. Guidelines for the nomination process are posted here.  Nominations are to be received by November 5th. Questions may be directed to Phil Van Hoy or Sandy Osborne.
 
• Top-of-the-Week Rotary will have their auction and costume ball Friday, October 26, 6:30 pm at Byron's South End. To purchase tickets ($35) contact Joan Ward, 704-387-7045.