ÿLG :ÿÿÿ March madness? : The party goes onÿÿ Barron's:
"ÿÿÿÿ What triggered the rush to the languishing shares of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ companies that make money and even make big ugly things
ÿÿÿÿÿÿÿÿÿÿÿÿÿ that rust in the rain is not entirely clear.......................ÿÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ... Cited..... were the unstartling rise in producer prices and
ÿÿÿÿÿÿÿÿÿÿÿÿÿ a dull report on industrial production, which the Street
ÿÿÿÿÿÿÿÿÿÿÿÿÿ seized on as evidence of restrained inflationary pressure,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ thatÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿ would encourage Mr. Greenspan, when he and his
ÿÿÿÿÿÿÿÿÿÿÿÿÿ buddies meet this Tuesday,ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿ TO ADHERE TO HIS POLICY OF INEFFECTUALÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ RATE INCREASESÿ "
ÿÿÿÿÿÿÿÿÿÿÿ ----------------------------------
After a brief fall this AM, DOW and NAZ are back up.
Proving conclusively that nobody cares about Alan G and
what he does.ÿ
Party to contiue?
:-)
TA
---------------------------------------------------------------------------------------------------
ÿÿÿÿÿÿÿÿÿÿÿÿÿ MARCH 20, 2000
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Role Reversal
ÿÿÿÿÿÿÿÿÿÿÿÿÿ By Alan Abelson
ÿÿÿÿÿÿÿÿÿÿÿÿÿ March madness?
ÿÿÿÿÿÿÿÿÿÿÿÿÿ And we are not referring to the mass hysteria served up
ÿÿÿÿÿÿÿÿÿÿÿÿÿ this time every year by those for-profit peddlers of amateur
ÿÿÿÿÿÿÿÿÿÿÿÿÿ sport known as the NCAA.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ No, we're most definitely not talking about hoops loopiness
ÿÿÿÿÿÿÿÿÿÿÿÿÿ here. We're talking stocks and the stunning role reversal
ÿÿÿÿÿÿÿÿÿÿÿÿÿ that took place last week in Wall Street.
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿÿ
interactive.wsj.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ Nasdaq, the world's only perpetual levitation machine,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ invented by the devil back inÿ 1971, had started off March in
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ its usual ebullient fashionÿ with a fresh burst upward,
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ enabling it, for the first timeÿ ever, to pierce 5000. Quite
ÿÿÿÿÿÿÿÿÿÿÿÿÿÿ unexpectedly, however, itÿ then proceeded to do a
ÿÿÿÿÿÿÿÿÿÿÿÿÿ breathtaking bungee jumpÿ plunging through 4500 last Thursday,ÿ
ÿÿÿÿÿÿÿÿÿÿÿÿÿ before its faithful following was able to yank it back up.
ÿÿÿÿÿÿÿÿÿÿÿ ÿÿ Meanwhile, the venerable Dow, which for darn near a year
ÿÿÿÿÿÿÿÿÿÿÿÿÿ has been giving a terrific imitation of an old stumblebum
ÿÿÿÿÿÿÿÿÿÿÿÿÿ with two left feet, had continued its derelict ways in the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ early part of the month and found itself once again looking
ÿÿÿÿÿÿÿÿÿÿÿÿÿ up at 10,000. But, completely without warning, it came
ÿÿÿÿÿÿÿÿÿÿÿÿÿ alive last week with the biggest bang heard in these parts
ÿÿÿÿÿÿÿÿÿÿÿÿÿ since those evil terrorists tried to blow away the World
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Trade Center.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Two quantum leaps -- 320 points on Wednesday and nearly
ÿÿÿÿÿÿÿÿÿÿÿÿÿ 500 points on Thursday -- were more than enough to boost
ÿÿÿÿÿÿÿÿÿÿÿÿÿ the Dow back over 10,000 with daylight to spare. In that
ÿÿÿÿÿÿÿÿÿÿÿÿÿ memorable penultimate session, as the revitalized
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Industrials posted their biggest single-day gain in recorded
ÿÿÿÿÿÿÿÿÿÿÿÿÿ history (and probably in unrecorded history, as well),
ÿÿÿÿÿÿÿÿÿÿÿÿÿ volume swelled to 1.48 billion shares, an unprecedented
ÿÿÿÿÿÿÿÿÿÿÿÿÿ amplitude that brought tears to more than one sentimental
ÿÿÿÿÿÿÿÿÿÿÿÿÿ broker's beady eyes.
ÿÿÿÿÿÿÿÿÿÿÿ ÿÿ The Dow's stunning reawakening was all the more
ÿÿÿÿÿÿÿÿÿÿÿÿÿ remarkable in that it coincided with a monster seizure of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ vertigo among the techs.ÿ In other words, hard as it may be
ÿÿÿÿÿÿÿÿÿÿÿÿÿ to believe, companies with earnings and recognizable
ÿÿÿÿÿÿÿÿÿÿÿÿÿ multiples of those earnings were going up, even as
ÿÿÿÿÿÿÿÿÿÿÿÿÿ companies with no earnings and hence no multiples were
ÿÿÿÿÿÿÿÿÿÿÿÿÿ going down.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ This bizarre bifurcated action, precisely the opposite of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ what humankind has been witness to lo! these many months,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ inspired in us, we must confess, weird and phantasmagoric
ÿÿÿÿÿÿÿÿÿÿÿÿÿ visions. We imagined, for example, that we espied shoots
ÿÿÿÿÿÿÿÿÿÿÿÿÿ of sanity sprouting in the molten investment landscape.
interactive.wsj.com
ÿÿÿÿÿÿÿÿÿÿÿÿÿ That shows you just how shook up we were by the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ experience of seeing autos and banks and metals boom
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ahead, while techs of everyÿ description were dumped like
ÿÿÿÿÿÿÿÿÿÿÿÿÿ yesterday's trash. Fortunately, the rapid return to favor of the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ vapor stocks late Thursday and on Friday more or less
ÿÿÿÿÿÿÿÿÿÿÿÿÿ restored our equilibrium.
ÿÿÿÿÿÿÿÿÿÿÿÿ ÿ What triggered the rush to the languishing shares of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ companies that make money and even make big ugly things
ÿÿÿÿÿÿÿÿÿÿÿÿÿ that rust in the rain is not entirely clear.ÿ Some observers
ÿÿÿÿÿÿÿÿÿÿÿÿÿ credited a rumor that Al Gore was preparing a tax package
ÿÿÿÿÿÿÿÿÿÿÿÿÿ that would eliminate taxes on Old Economy companies and
ÿÿÿÿÿÿÿÿÿÿÿÿÿ also on any capital gains garnered from investing in such
ÿÿÿÿÿÿÿÿÿÿÿÿÿ companies. But the rumor couldn't be confirmed, and Mr.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Gore's aides confided that the plan in truth was far less
ÿÿÿÿÿÿÿÿÿÿÿÿÿ sweeping -- only corporate and individual contributors to
ÿÿÿÿÿÿÿÿÿÿÿÿÿ the Veep's campaign would be granted such tax
ÿÿÿÿÿÿÿÿÿÿÿÿÿ forgiveness.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Cited, too, were the unstartling rise in producer prices and
ÿÿÿÿÿÿÿÿÿÿÿÿÿ a dull report on industrial production, which the Street
ÿÿÿÿÿÿÿÿÿÿÿÿÿ seized on as evidence of restrained inflationary pressure,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ thatÿ would encourage Mr. Greenspan, when he and his
ÿÿÿÿÿÿÿÿÿÿÿÿÿ buddies meet this Tuesday, to adhere to his policy of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ineffectual rate increases.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ In the absence of any truly persuasive analysis, we'll settle
ÿÿÿÿÿÿÿÿÿÿÿÿÿ for spontaneous combustion as the explanation for what
ÿÿÿÿÿÿÿÿÿÿÿÿÿ happened in the stock market last week. Whatever touched
ÿÿÿÿÿÿÿÿÿÿÿÿÿ it off, we do know that adding huge quantities of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ high-octane fuel to the powerful surge in cyclical stocks
ÿÿÿÿÿÿÿÿÿÿÿÿÿ was massive buying by the momentum crowd, spearheaded
ÿÿÿÿÿÿÿÿÿÿÿÿÿ by those big equity growth mutual funds that have been the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ prime kiters of the techs, including, of course, the Internet
ÿÿÿÿÿÿÿÿÿÿÿÿÿ wonders.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ The advance was more heartening for its sweep than even
ÿÿÿÿÿÿÿÿÿÿÿÿÿ for its awesome point-getting prowess. Hardly a sector --
ÿÿÿÿÿÿÿÿÿÿÿÿÿ or, for that matter, a stock -- failed to participate. Friday's
ÿÿÿÿÿÿÿÿÿÿÿÿÿ action wasn't especially promising that the role reversal
ÿÿÿÿÿÿÿÿÿÿÿÿÿ would stick or even that we'd get what has become a real
ÿÿÿÿÿÿÿÿÿÿÿÿÿ rarity -- an encompassing market move up. We'll see soon
ÿÿÿÿÿÿÿÿÿÿÿÿÿ enough.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ But come what may, it was simply a terrific week for
ÿÿÿÿÿÿÿÿÿÿÿÿÿ investors, even that obsolete species -- value investors.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ For spectators, moreover, it provided more excitement than
ÿÿÿÿÿÿÿÿÿÿÿÿÿ they're likely to get from that other manifestation of March
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Madness, where a bunch of tall guys run up and down the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ court, bang into each other and occasionally throw a round
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ball toward the ceiling.
ÿÿÿÿÿÿÿÿÿÿÿÿ As intimated above, the notion that the economy is
ÿÿÿÿÿÿÿÿÿÿÿÿÿ slowing and inflation remains comatose provided rational
ÿÿÿÿÿÿÿÿÿÿÿÿÿ cover for investors' indulging their irrepressible impulse to
ÿÿÿÿÿÿÿÿÿÿÿÿÿ buy. We think the notion wrong on both counts.
ÿÿÿÿÿÿÿÿÿÿÿÿ For openers, consumers are still very much in a spending
ÿÿÿÿÿÿÿÿÿÿÿÿÿ mood. Retail sales last month grew a decidedly unshabby
ÿÿÿÿÿÿÿÿÿÿÿÿÿ 1.1%, and the rise embraced a raft of different kinds of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ goods; there was nothing freakish or flukish about it.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ What's more, the latest data suggest that all along the way,
ÿÿÿÿÿÿÿÿÿÿÿÿ from manufacturer through retailer, goods are being eaten
ÿÿÿÿÿÿÿÿÿÿÿÿÿ up much faster than replenished.
ÿÿÿÿÿÿÿÿÿÿÿÿ Low inventory/sales ratios, in the light of the undampened
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ardor of consumers to consume, point to a brisk level of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ production over a wide swath of the economy in the months
ÿÿÿÿÿÿÿÿÿÿÿÿÿ ahead. If, as Mr. Greenspan contends (and we agree), the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ public's lust to shop is fired up by the wealth effect, last
ÿÿÿÿÿÿÿÿÿÿÿÿÿ week's big stock-market rally is surely not calculated to
ÿÿÿÿÿÿÿÿÿÿÿÿÿ diminish that appetite or, for that matter, his concerns.
ÿÿÿÿÿÿÿÿÿÿÿÿ The demise of inflation, moreover, has become a given,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ when it really isn't. One way, of course, to ensure that
ÿÿÿÿÿÿÿÿÿÿÿÿÿ inflation will never rise again is to studiously ignore
ÿÿÿÿÿÿÿÿÿÿÿÿÿ evidence of its revival. That at least seems to be the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ reigning tendency in both Wall Street and Washington.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Take the complacency, if not comfort, with which the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ official price reports released last week were generally
ÿÿÿÿÿÿÿÿÿÿÿÿÿ received. Now, we realize that if you eliminate such
ÿÿÿÿÿÿÿÿÿÿÿÿÿ nonessential items as food, energy and shelter, then,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ indeed, the latest readings on the producer price index and
ÿÿÿÿÿÿÿÿÿÿÿÿÿ the consumer price index offer not the slightest source of
ÿÿÿÿÿÿÿÿÿÿÿÿÿ pother.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ As it happens, we have this silly impression that gasoline
ÿÿÿÿÿÿÿÿÿÿÿÿÿ and heating oil are rather important parts of the family
ÿÿÿÿÿÿÿÿÿÿÿÿÿ budget and, further, that the reasons their prices have
ÿÿÿÿÿÿÿÿÿÿÿÿÿ climbed so sharply are apt to be operative for some time to
ÿÿÿÿÿÿÿÿÿÿÿÿÿ come. Even in this brave new-age economy, oil matters,
ÿÿÿÿÿÿÿÿÿÿÿÿÿ and a lot.
ÿÿÿÿÿÿÿÿÿÿÿÿÿ Further, the truth about housing finally has penetrated the
ÿÿÿÿÿÿÿÿÿÿÿÿÿ consciousness and methodology of the government's data
ÿÿÿÿÿÿÿÿÿÿÿÿÿ gatherers. The truth is that housing has been getting
ÿÿÿÿÿÿÿÿÿÿÿÿÿ increasingly pricey, and, indeed, the cost of shelter scored
ÿÿÿÿÿÿÿÿÿÿÿÿÿ its biggest monthly rise since 1991. That's another trend not
ÿÿÿÿÿÿÿÿÿÿÿÿÿ likely to change in the immediate future.
===================
Message #43731 from LG at Mar 21 2000 10:43AM
This bounce has turned into a clear intraday possible ST reversal.
Regards,
LG |
