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To: Jan Crawley who wrote (80962)	10/17/1999 2:55:00 PM
From: Glenn D. Rudolph	Respond to of 164684

WALL ST WEEK AHEAD/Seen staggering after blow last week By Eric Wahlgren NEW YORK, Oct 17 (Reuters) - Beaten up by signs of inflation, stocks are likely to cower at six month lows this week unless they gather the courage to fight back after word on how prices are affecting consumers comes out on Tuesday. News including a report that wholesale prices saw their biggest monthly spike in nine years sent the blue chips reeling into a correction last Friday, with the Dow Jones industrial average closing off 266.90 points at 10019.71. The closely-watched index is now nearly 12 percent -- a 10 percent decline qualifies as a correction -- off its record 11,326.04-high of Aug. 25. Analysts doubt stocks will make any comeback until the U.S. Labor Department on Tuesday releases the Consumer Price Index (CPI), which should give further clues on whether future inflation-taming interest rate hikes are in store. The CPI gauges inflation at the consumer level. "I think markets are going to be pretty guarded until the CPI comes out," said A.C. Moore, chief investment strategist at Dunvegan Associates in Santa Barbara, Calif. "Then it will be able to rally." Economists polled by Reuters are expecting the index to show a 0.4 percent increase for September. The index's core number, which strips out food and energy, is seen rising 0.3 percent. Stronger-than-anticipated figures will only give the Federal Reserve more ammo to jack up rates when its policy-setting committee meets in November, Wall Streeters said. "If in fact inflation is becoming widespread, the door opens for the Fed to raise interest rates, perhaps even more than once," said Pierre Ellis, senior economist at Primark Decision Economics. "Investors are kind of looking into the abyss of that right now." In a sign of Wall Street's despair, the Dow last Friday briefly dipped below its psychologically-important 10,000 barrier before finishing down 630 points for the week, its greatest weekly point loss ever. Besides the discouraging news on the inflation front, Wall Street was also shaken by bearish comments from Fed Chairman Alan Greenspan and a sudden surge in the benchmark long bond's yield. The 30-year U.S. Treasury bond yield's jump to a 2-year closing high of 6.33 percent last Thursday rattled markets because it made treasuries more competitive with stocks as investments. Its price settled up 27/32 last Friday, sending the yield to 6.26 percent. Some analysts said the current economic conditions, which include a weakening dollar, strong oil prices and the rising bond yield, were in place when the stock market crashed in October 1987. Moore, who called the stock market overvalued, said he would not be surprised to see the Dow for a while trading below its 10,000 milestone, which it reached in April of this year. "It would be very usual for a market to fall back to those levels," Moore said. "It is not unusual for bull markets to be punctuated by bear markets." The current fixation on interest rates has diverted attention from what is shaping up to be a respectable third quarter earnings season. The 119 companies that have reported so far have topped expectations by 3.5 percent, according to First Call/Thomson Financial. Some analysts said they believed the bloodbath may more or less over. Markets would bounce back, they said, thanks to the solid results from America's biggest companies. "I think the better earnings will help us somewhat," said Seth Glickenhaus, a partner at Glickenhaus & Co. "I think we are going to pull out of" the slump. At least four Dow components, photography products maker Eastman Kodak Co. <EK.N>, automaker Ford Motor Co. <F.N>, and financial services concerns Citigroup Inc. <C.N> and J.P. Morgan and Co. Inc. <JPM.N> are due to report on Monday. Microsoft Corp. <MSFT.O>, the world's largest software maker and a bellwether for the sector, is expected to report strong earnings o...

To: Jan Crawley who wrote (80962)	10/17/1999 3:32:00 PM
From: Eric Wells	Respond to of 164684

Jan - thanks for the posts. I find the comments on how even smart people can lose money to be interesting. Accounts of the South Sea Bubble (1720s) tell of how Isaac Newton made quite a bit of money through investments in the South Sea Company - but when he saw that the company was in a bubble, he got out, realizing a large profit. However, after Newton got out, the bubble did not burst - Newton let greed get the better of him - and he got back in, reinvested in the South Sea Company, thinking he could time it right and get out before it collapsed. He didn't. And when the South Sea Company collapsed, Newton lost a large percentage of his net worth (much more than the initial profits he had made). And so here we have a case where a very bright individual (Newton) recognized the bubble (as did many other people) and tried to milk it to make money - but failed. -Eric