AlphaProfit Sector Investors' Newsletter: August 19, 2007 Bulletin

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AlphaProfit Newsletter: August 19, 2007 Bulletin

Subject: Central Banks Respond to Credit Crunch

Dear Valued Subscriber,

On Friday August 17, the Federal Reserve lowered its benchmark discount rate by 0.5%. Equity investors reacted positively to this development and stock prices rallied. The S&P 500 index gained nearly 2.5% with most sectors and industry groups participating in the rally.

Over the past month, losses endured by financial institutions on mortgage-related securities caused credit markets to tighten around the world. On August 9, the European Central Bank loaned nearly 95 billion euros or $130 billion in response to a sudden demand for cash from banks. Over the next several days, central banks from many industrialized nations added liquidity to money markets. The reduction in the Federal Reserve’s discount rate is the latest in a series of steps taken by central banks to support financial markets.

The coordinated response from leading central banks sends a signal that bankers are determined to keep credit market losses from sapping economic growth. Assuming central banks do what it takes, they should likely be successful in maintaining the global economy on its growth path.

In the near-term however, there may well be more negative news to come from mortgage institutions and hedge funds. This in turn can setup attractive buying opportunities. Subscribers may take advantage of weakness in automotive, gold, and materials-related holdings to add to positions. Investors putting money to work during this phase of declining stock prices will likely be rewarded in the period ahead.

With the model portfolios already fully invested, we are making no changes to them at the present time. The next Indicator Update will be published on Tuesday, September 4.

Sincerely,
Sam Subramanian
AlphaProfit Investments, LLC
Ideas. Insights. Results.
http://www.alphaprofit.com

Notes: The AlphaProfit Sector Investors' Newsletter™ is for information purposes only. AlphaProfit Investments, LLC is not soliciting any subscriber to buy or sell any security. Nothing herein should be construed as an offer to buy or sell securities or to give individual advice on investing. Before buying or selling any mutual fund, exchange-traded fund, security, or investment, read the prospectus carefully. For securities held in brokerage accounts, read the broker's specific terms and conditions which apply to trading of the securities. AlphaProfit Investments, LLC cannot and does not give any assurance that the present or future model portfolio changes will be profitable. Past performance is not a guarantee for future results. Factual material is obtained from sources believed to be reliable and is provided without warranties of any kind. AlphaProfit Investments, LLC is not responsible for any errors or omissions. AlphaProfit Investments, LLC neither is associated with nor receives any compensation from any of the mutual fund companies, brokers, or entities connected with the exchange-traded funds mentioned in the newsletter. Please review our Terms and Conditions of Use and Subscriber Agreement which is available on our website at www.alphaprofit.com; they govern your relationship with AlphaProfit Investments, LLC, including, but not by way of limitation, use of this newsletter. No part of the AlphaProfit Information may be reproduced or re-transmitted in any manner without written permission of AlphaProfit Investments, LLC.