The economy is coming out of, or may be out of recession. Would somebody please notify the market? Positive economic news is becoming almost commonplace, but its market impact has been mostly counter-intuitive. In a bear market bad news is bad news and good news is sometimes bad news. Many of the favorable economic releases of late have been greeted with fears of inflation and higher interest. Yesterday, Jack Guynn, Atlanta Fed. President and non-voting member of Greenspan’s inflation police, knocked the wind out of the struggling market’s sails when he said that the Fed stood ready to raise rates
Remember the sensation caused by the all-girl rock bands in the early sixties? Doo-Wop ‘classics’ like He’s a Rebel and Da Doo Ron Ron by the Crystals and The Leader of the Pack by the Shangri Las filled the airways. The early 2000’s might well be remembered for the exploits of Mr. Kenneth Lay, the rebel, and his pack of execs and auditors, who have wrought their own brand of havoc on our culture. It’s hard to go anywhere without hearing people talk about Enron and its massive and complex web of greed and deceit.
As we pointed out last week, the ‘January Effect’ never materialized. Typically, January’s market volume is among the highest of the year as 401-K’s and corporate retirement plans receive their largest contributions. In addition, investors come back to the markets in January to replace stock they sold for tax-losses at the end of the prior year. The scarcity of enthusiastic buyers and a general malaise among investors weighed heavily on last month’s markets. The S&P 500 declined 1.5%, the Dow declined .91%, and the NASDAQ fell by .82%. The S&P 600, the index of small companies managed a gain of
There is an old adage on Wall Street that says, ‘as goes January, so goes the year.’ The indicator has accurately predicted the market’s direction for the full year in 48 of the past 51 years. The Vietnam War affected the results of two of the three incorrectly predicted years just as September 11th may impact this year’s results. But if the indicator has any validity at all, it doesn’t look like 2002 will provide the comeback we were hoping for.
Earnings season stirs the market like few other forces, but especially in these times of economic uncertainty. Investors and analysts hang on every word uttered as managers discuss their results for the quarter and hint at what their future might bring. Body language, pauses, annunciations, and emphases are all noted and endlessly scrutinized. Early in the week, the news was decidedly negative as Intel, Juniper Networks, and RF Micro, followed by General Motors, JP Morgan, and others disappointed with their earnings releases. Then on Wednesday afternoon, the tide shifted with positive earnings news from Advanced Micro, Compaq, Symantec fueling the
The tug-of-war between the Bulls and the Bears continues as analysts and investors fret over half-full or half-empty scenarios. There is little argument that the economic numbers suggest a bottoming in the economy. The rise in unemployment is slowing, consumer confidence is improving, commodities’ prices are rising from their lows, and bond prices are declining. The big question centers on the speed of the recovery and the vitality of corporate earnings. The stock indexes, historically the best leading indicators, are signaling recovery sooner, rather than later. The NASDAQ Composite index reached a six-month high on Wednesday.
It’s 18 degrees outside with more than a foot of snow on the ground, but news of Washington politics, worse than usual, still manages to make my blood boil. I know it’s 2002 and control of the Senate and House are up for grabs by Republicans or Democrats. But, I still manage to allow my optimistic nature the latitude to expect that, occasionally and for longer than a few days, congressmen and women could place concerns of our economy and our national well being above political point making. Tom Daschle, Senate Majority Leader, in a noon speech today, will call
Did you really expect the U.S. Senate to come together at the last minute to craft a stimulus bill in time for Christmas? The last target date for such an economic lifesaver was Thanksgiving. They are further apart now than they were before Thanksgiving. Senate Majority Leader Tom Daschle “Dr. No,” said the Senate wouldn’t take up the stimulus bill passed by the House early Thursday, or any other stimulus bill this year. He left open the possibility that talks will resume when Congress returns in late January. Investors took their anger to the markets yesterday as the Dow and
To the casual observer, this week’s markets seem overly concerned with news that should have been expected and already priced into stocks. We know, for instance, that a recession means higher unemployment numbers, declining payrolls, and weaker retail sales. So why did it seem like investors ran for the exits this week after the buying spree of the week before? The answer lies somewhere between human nature and the tax code. Last week saw a market poised shake off months of pessimism in favor of the possibility that the economy would be turning soon. Stocks rallied as investors and portfolio
In April of 1991, the National Bureau of Economic Research declared that a recession had begun eight months earlier in July of 1990. They later announced that same recession had ended in March of 1991. The recession was actually over and recovery in progress before the recession was officially declared. The same official body recently declared that our economy entered a recession in March of this year. The economy contracted at a 1.1% annual rate between July and September as consumer spending slowed, business spending slumped, and companies slashed inventories. It is the largest decline since the first quarter of