Elaine Garzarelli: commentary + "The bear market is over"
Commentary, 1/26/01:
garzarelli.com
"The bear market is over"--Market Watch, 1/23/01:
cbs.marketwatch.com ***
-----------------------------------------------------------------------------------------------------------
Rearranged for emphasis & ease of reading.
>>>Stock market analysis for January 26
The Nasdaq has rebounded about 25% since the Fed lowered rates (when our indicators rose to bullish).
This helps the economy accelerate -- along with lower interest rates, a big increase in refinancings, and talk of tax cuts.
This enforces our view that a recession is unlikely or if so will be, a mild one.
We believe the Fed will continue to lower interest rates.
There has been news over the past weeks about layoffs, with an average of about 24,000 per week (almost a record), and a survey of corporate travel managers showing 61% have curtailed all but the most essential travel within their companies.
Globally, the easings should continue, and there have recently been 15 central bank easings including Canada, Chile, Brazil, Hong Kong, and Hungary.
Greenspan's testimony to the Senate Budget Committee on Thursday did not alter any of our expectations about the environment.
Our stock market indicators:
...remain bullish at 81.0%, and
...we expect the S&P 500 price index to rise 20% to 40% over the next 12 months or so.
Wall Street analysts have lowered their estimates for 2001 S&P 500 operating earnings:
... from 18.4% (two quarters ago) to only 2.0% today.
... This is good news for the stock market:
.......since expectations now are much lower, and
.......any upside surprise should help stocks rally.
...........................................................
Interest rate/bond market analysis for January 26
While the bond market still is pricing in several more easings which should be supportive for Treasuries, further gains in the stock market may weigh on the curve as monies are put to work in the stock market.
We are not putting new money into the bond market but rather taking advantage of the values in the stock market.
Yields should remain around these levels for the next 6 to 12 months, we believe. <<<
==========================================================================
>>>The bear market is over
Bullish indicators; another Fed cut expected
By Frank Barnako, CBS.MarketWatch.com
Last Update: 4:07 PM ET Jan 23, 2001
NEW YORK (CBS.MW) -- Money manager Elaine Garzarelli said Thursday that happy days are here again for investors.
"The bear market is over," she told the MarketWatch.com Radio Network. "The S&P 500 (SPX: news, msgs) should gain 20 to 40 percent in the next 12 months."
For perspective on her enthusiasm, Garzarelli's Forward US Equities Fund (FFDEX: news, msgs) is up 2 percent this year, while the S&P 500 is ahead 0.7 percent. In 2000, her fund, while losing 4 percent, bested the S&P by about 6 percent.
Her new bullishness was fueled Jan. 3, when her menu of technical indicators gave a buy sign, after having been negative since May 2000.
Listen to the interview .<===Go to the above link.***
"When the Federal Reserve eases later this month," she said -- adding there is no doubt in her mind that a rate cut of 25 or even 50 basis points is coming -- "the indicators will get even more BULLISH."
Among the forces at work is a lowering of interest rates in the market:
... A long-term, 6.5 percent bond rate has fallen to about 5 percent.
...This will yield a "big spike in housing," she predicts.
...And "zooming refinancings" will give consumers more cash to spend.
"The rally's beginning.
...Consumer spending will pick up, and
...the economy will show the signs by midyear.
...But the stock market will recognize it now," she said.
The places to be are:
... auto stocks,
... brokerage firms,
... some newspapers,
... household furnishings, and
... appliance makers.
She cites:
...The New York Times Co. (NYT: news, msgs), and Gannett Co. (GCI: news, msgs)
......as due for 12-month appreciation of at least 60 percent.
...A stronger consumer economy will produce increased advertising,
........ which will benefit the publishers, Garzarelli predicts.
She considers the paper companies some of the many "incredible opportunities"
...firms selling at depressed prices,
...with price-to-earnings ratios at historic lows.
..."You only get these chances every 10 years," she said.
Other Garzarelli favorites:
... Charles Schwab (SCH: news, msgs),
........ down 35 percent from its 52-week high;
... Bear Stearns (BSC: news, msgs); and
... Lehman Bros. (LEH: news, msgs).<<< |
