Commentary--Elaine Garzarelli for 11/10/00...
garzarelli.com
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Edited for emphasis and ease of reading.
>>>Stock market analysis for November 10
With the election still looming in the minds of investors, the stock market remains volatile.
From their highs, the S&P 500 is down 10%, The Dow 9%, and the NASDAQ 40%.
The effects of the prolonged vote dispute are causing a drag on the stock market in many ways. The stock market does NOT like uncertainty and has magnified worries about the stability of the economy and corporate profits.
Business firm KPMG is holding off on an initial public offering, and productivity may be somewhat affected this quarter since a survey found that a majority of people are following the election from their offices -- hurting their work schedules.
Additionally, there is more evidence of the U.S. slowdown as companies report layoffs (Teligent lays off 780 to cut costs), GM is cutting back on vehicle production for the fourth quarter, and many developing economies are struggling (Argentina, Mexico, Brazil, and Korea).
Domestically, inflation is low with two out of three core PPI components (finished and crude) declining (month to month).
Our indicators remain at 60% and we are invested in a selection of industry groups. We believe this is a terrific opportunity to buy some groups at basement prices.
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Interest rate/bond market analysis for November 10
The Federal Reserve will meet on November 15th and markets believe there will be no change in the fed funds rate.
Even with the election outcome unknown, we believe the bond market should be healthy as it is unlikely the budget surplus will go away regardless of which party wins.
We predict the 10-year yield should decline to 5.3% to 5.4% by the end of next year. Currently the rate is 5.81%. <<< |
