golf: It feels to me like the big money is pumping the SOX a bit to give an impression of strength -- lure in buyers to take inventory off their hands in other tech sectors.
I went from bullish on the market to bearish around 1:30 p.m. yesterday when that Abby Joseph Cohen story hit. Her answer to the economic problem was essentially this: "Let's all just stop talking about a recession, because we don't want to scare people into saving (rather than spending). Talking about a recession is a self-fulfilling prophecy; it'll shake consumer confidence and undermine spending, which will have ripple effects that cut throughout the economy. So, all of you naysayers -- just shut up!"
My bullish thesis was based on the idea that the market was deluding itself about the prospects for a return to growth: as long as it thought we'd uptick again within a couple of quarters, the market was a good place to be. If the market started to price in a longer downturn, with a recovery later this year or next year, then things would be bearish for a time.
In my mind, Cohen told us yesterday just how shaky the case for a quick recovery is. She essentially said that it all depends on consumer confidence, and that this confidence is really teetering right now. In fact, we can all see where consumer confidence is going: down the tubes. Abby thinks we can fool people into being confident just by continuing the shiny, happy talk. But when people are losing their jobs . . . well, any of us would tighten our belts if we felt our job security slipping away.
I bet Alan Greenspan will come out next Tuesday with the same basic message: consumer confidence is the issue, and the Federal Reserve will act aggressively to ensure that confidence remains stable.
Keep your eyes on the business news the next few weeks and see if analysts shift from talking about a recovery in the third quarter of 2001 to a recovery sometime in 2002. If this shift occurs, the market will have to price in a new round of near-term pessimism. I think that pessimism is starting to hit and show up in the market. Once the big money has lightened up, their talking heads will make the rounds (CNBC, Wall Street Journal) and begin to shake out the small fries. |
