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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (27775)	7/25/1999 2:59:00 PM
From: LABMAN	Respond to of 50167

IQ perils of a near perfect world Sunday July 25, 2:26 pm Eastern Time WALL ST WEEKAHEAD - Perils of a nearly perfect world By Richard Melville NEW YORK, July 25 (Reuters) - U.S. large cap stocks had nearly everything go their way last week. Nearly everything wasn't nearly enough. Earnings through the second quarter reporting period have by most measures been nothing short of magnificent, the U.S. economy continues to bubble along at a merry pace and hints of a recovery continue to emerge in Japan, although much work still lies ahead. Even interest rates, at least those set by the anxiety-ridden bond market, were working their way lower from recent peaks. That is until Federal Reserve Chairman Alan Greenspan showed up to report to Congress on the economy and took the opportunity to reiterate the central bank's commitment to fight inflation even before inflation is apparent in the economy and reflect one more time over whether the stock market was overvalued. Greenspan, as part of his semiannual Humphrey-Hawkins testimony, will revisit Congress this week, following up last week's address to the House committee with a Senate panel appearance on Wednesday. To many ears on Wall Street, his address last week sounded like standard fare from the man who has served as one of the stock market's leading disciplinarians over the last few years. Even so, the one discordant note, was sufficient to upset investors. The Dow Jones industrial average closed last week at 10,910.96, or about 298.88 points off the previous week's high with worries over Greenspan's words partly to blame for the drop. Analysts said the market's response, more than the actual events of the week, show how high expectations have ascended in investors' minds. ''This week was full of good news as corporate earnings regularly exceeded analysts expectations,'' said Ken Tower, technical analyst at U.S. Trust. ''Despite that, the decline was well underway even before Chairman Greenspan's testimony -- which amounted to his standard speech.'' ''Thus the market's reaction is more important than the news itself,'' Tower said. ''This week's reaction was quite negative and suggests at least a pause to the summer rally.'' How high have expectations climbed? Enough that earnings, which are exceeding estimates at a blistering pace, have failed to spark broad enthusiasm. According to data from research firm First Call, 66 percent of the 325 companies in the Standard & Poor's 500 index have topped Wall Street estimates this quarter. That's better by far than the 56 percent average over the last five years. Yet many companies have failed to rally after those strong earnings, in what analysts say is a sign investors are, astonishingly enough, anticipating -- even demanding -- surprises in profit growth. Technology stocks have highlighted the trend, according to Salomon Smith Barney portfolio strategist Marshall Acuff. Strong reports from International Business Machines Corp. (NYSE:IBM - news), Microsoft Corp. (Nasdaq:MSFT - news) and Lucent Technologies Inc. (NYSE:LU - news) ''resulted in almost a 100 point slide in Nasdaq earlier (last) week,'' Acuff said. ''This confirms our view that many of the large caps already discount significant growth potential and that investors are not willing to tolerate even the slightest hint of a slowdown, such as Microsoft's warning that growth will slow in 2000,'' he said. Neither Acuff nor Tower see the action as reason to abandon the market, however. Both are looking outside the big cap growth stocks for gains. ''Small and mid cap stocks look like a better bet than the big caps for the balance of the year,'' said Tower. Earnings season, at least among major companies, is mostly finished, although several key blue chip companies report this week, including financial services giant American Express Co. (NYSE:AXP - news) on Monday, followed in the week by fellow Dow components DuPont (NYSE:DD - news) and Minnesota Mining & Manufacturing (NYSE:MMM - news). Consumer products company Procter & Gamble (NYSE:PG - news) also is slated for this week. All four are expected to show profit increases. They had better. More Quotes and News: American Express Co (NYSE:AXP - news) E.I. Du Pont De Nemours & Co (DuPont) (NYSE:DD - news) International Business Machines Corp (NYSE:IBM - news) Lucent Technologies Inc (NYSE:LU - news) Microsoft Corp (Nasdaq:MSFT - news) MINNESOTA MINING (NYSE:MMM - news) The Procter & Gamble Co (NYSE:PG - news) Related News Categories: options, US Market News

To: IQBAL LATIF who wrote (27775)	7/25/1999 10:42:00 PM
From: tracor	Read Replies (1) \| Respond to of 50167

Ike, I cant imagine that anyone that spends the time to read your writings could come to the conclusion that your" thinking material" is a waste. You are a very profound thinker. Thank you for sharing your insights. Regards, RZ

To: IQBAL LATIF who wrote (27775)	7/26/1999 1:05:00 PM
From: Lee	Read Replies (1) \| Respond to of 50167

Hi Ike,..Re:.AG looks at productivity gains but completely misses the fact that huge number of global experts are immigrating to SV and the size of expert pool is increasing,he also fails to note that Bangalore's of the world are taking a lot of high cost entry level work away from US, Excellent point. Work is constantly shifting to most efficient centers. This shifting seems to have the effect of opening up new areas for high tech while still benefiting from the lowest cost manufacture. It is amazing. Also, while the smokestack industry in the US is still important, it is apparently becoming a smaller and smaller portion of overall GDP as time progresses. So again we have a shaky equilibrium as quiet shifts occur.<g> In case you're interested in some anecdotal type industry news, it shows regional strength and maybe why some of the Fed guys are still stuck on costs and price stability.<g> REALITY CHECK: CHICAGO PURCHASERS SAY ACTIVITY SURGED IN JULY economeister.com Michelini noted that most raw materials costs remain muted except for copper "Labor is in very short supply," he said. He does worry about wage inflation, noting that "local McDonald's are paying $7 to start -- we've never seen that before." Also, apparently Germany (Otmar Issing) is becoming worried as well.<g> GERMAN PRESS: ECB'S ISSING: 'HEIGHTENED VIGILANCE' ON PRICES economeister.com "The situation has changed" since the ECB lowered key interest rates in early April, he said. "The euro-area economy is improving, we have strong money supply growth and private credit growth over 10%. And the effect of the weak euro on import prices has to be watched." Recent data indicate that euro-zone economy is seeing a "broad-based rebound," Issing said. "We have been waiting for this for a long time." So, I think you have a very good idea about having some cash ready to put to work and I'm doing the same. Thanks for all your thoughtful comments. Lee