This stuff is gonna get really old in 5 years....
It's gonna read like the Arthur Dent/ Civil Servant-BullDozer driver chapter of "HitchHikers Guide to the
Galaxy" everyone takes it as read that the other party is
still there doing there job of cajoling................
Bill's got it right about a Giant Head Game.....
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By Bill Meehan
Special to TheStreet.com
08/29/2001 09:07 AM EDT
It was all about confidence Tuesday, and confidence remains the key to the market and to the economy in the immediate future. After the market withstood the Fed's "no confidence" vote last week and even rallied on Cisco's (CSCO:Nasdaq - news - commentary) less-than-wildly-bullish announcement Friday, its reaction to the modest decline in consumer confidence Tuesday illustrated just how fragile the market's technical underpinnings are these days. In fact, the data, ordinarily a less-than-critical metric, were really only as negative as Cisco's pronouncement that business is beginning to stabilize was positive.
Welcome to the world's largest and most important head game. And for an encore, Wednesday's first revision to second-quarter gross domestic product promises to carry more importance than it ever does in "normal" times. It's a given that GDP will be revised lower; the only things in question are whether the number is positive or negative and how a very thin market will digest the news. From my perch atop the world, it's hard to see how the data can possibly bring glad tidings and cheer. Then again, we're talkin' government numbers here, which sometimes prove to be mystical and unfathomable. Stay tuned. It could be a wild ride Wednesday morning.
Problems Ahead
Needless to say, stocks were lower in Euroland Wednesday morning, and the Nikkei made yet another new 17-year low, closing below the 11,000 mark as bank stocks were pounded. Bank stocks here at home also look vulnerable to further downside pressure as the domestic economy remains cloudy and consumers are barraged with news of massive layoffs on a daily basis. Gateway (GTW:NYSE - news - commentary) was the latest to announce that it's slashing its payroll, as it will dispose of 25% of its workforce. Bank of America (BAC:NYSE - news - commentary), which has significantly outperformed the Philadelphia Stock Exchange/KBW Bank Index since the July lows, appears to be particularly vulnerable technically, and further weakness in the financial sector bodes ill for the overall market. It's not Japan, but the outlook for profits isn't pretty either.
Wednesday also brings Sun's (SUNW:Nasdaq - news - commentary) analyst meeting, but you don't need a vivid imagination to realize that it's likely to guide estimates lower. Goldman Sachs' Laura Conigliaro cut her numbers again Tuesday, and her track record indicates that many others are likely to follow Wednesday. Although Texas Instruments (TXN:NYSE - news - commentary) said it sees improved demand for handset chips, which temporarily offset Conigliaro's call, the semi complex looks dire. The Philadelphia Stock Exchange Semiconductor Index lost 2.8% in the final two hours of trading Tuesday and took out its 20-day simple moving average. All of the major market measures closed on their lows, with the QQQs (QQQ:Amex - news - commentary) closing below 39 for the 10th straight session. Confidence in a near-term reversal in chip demand is rapidly eroding, and the group continues to look very attractive from the short side. |
