FED--
To: Paul Shread who wrote (38350)
From: CRUSADER4TRUTH Monday, Dec 18, 2000 5:37 PM ET
Reply # of 38371
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 |
