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Strategies & Market Trends : Stock Attack -- A Complete Analysis

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To: Paul Shread who wrote (38350)	12/18/2000 5:37:31 PM
From: Secret_Agent_Man	Read Replies (1) of 42787

THE BUZZ AT THE BELL Suddenly the Street is buzzing with the possibility that the Fed will decide to cut interest rates tomorrow. Until last Friday, no one was entertaining the idea of a rate cut so soon. But now people are saying it's a 50-50 possibility. What changed? You'll hear that the economy is slowing, the market is slipping and consumers are sleeping. And all of those things are true. But the down-and-dirty that really scares policymakers are reports like these from today's minor headlines: Aetna said today it will eliminate 5,000 jobs in a restructuring of its health insurance business; Gillette announced it will cut 2,700 workers (8% of its workforce) to reduce costs; Solutia (formerly part of Monsanto) will cut 800; and GM will trim 20% of its operations in the next three years. Cuts like those put the Fed under tremendous pressure tomorrow, and explains the rally in financial stocks that lifted the Dow today. The Dow closed 210 points higher and the S&P Bank index was up 4%. Citigroup gained 3% and J.P. Morgan was up 4%. Utilities and transportation stocks were also strong. But the Nasdaq lost 28 points in its fifth consecutive day of losses. Trading was heavy. Finally, Time Warner warned today that its earnings will fall short of expectations in this quarter. The company blamed weaker than expected music sales, softening advertising revenues, and disappointing ticket sales for "Little Nicky," a movie in which Adam Sandler plays the son of Lucifer Beelzebub. Time's stock lost 14% and America Online, which is taking over Time, lost 13%. It's interesting (or confusing) that the world's largest media company (soon to grow larger) would single out for blame one film by a comedian who is not in the pantheon of comic giants. Is this a case of refreshing candor? Refreshing obfuscation? Or just blaming their problems on the Devil? To quote Bugs Bunny, a comic giant from Warner's past: "What's up, Doc?" Peter Nulty

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