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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Les H who wrote (104822)5/25/2001 10:43:55 AM
From: ild  Read Replies (1) of 436258
 
Intra-Day Market Talk:
Friday, May 25, 2001

10:07 AM
ECONOMY TALK: The weakness in the durable goods report was fairly widespread and can't in this case be blamed on the volatile aircraft component--durable goods orders excluding transportation fell 3.3%. Key components of the report were very weak, the most important of which was the 4.0% drop in non-defense capital goods orders excluding aircraft. That weakness underscores the notion that capital spending remains the weak link in the U.S. economy. That 4.0% drop was the sixth decline in seven months and orders in this category now stand sharply lower than year ago levels. Continued weakness in capital spending is fodder for the bears who believe that a secular downturn is now in place. This camp believes that years over excessive investment in capital equipment will take at least 1-2 years to remove. But the optimists, including Fed Chairman Alan Greenspan, believe that the technology sector has not yet matured and that current woes will ultimately dissipate. It is notable that it takes six months of sustained improvement to spark renewed strength in capital spending. Since final demand has not yet recovered much, it should not be surprising to see continued weakness. Nevertheless, the 8.8% drop in orders for computers and electronics equipment won't help the bull case much. Luckily, the weak book-to-bill report by semi.org gave a forewarning in this regard.
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