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To: Lucretius who wrote (28369)	4/22/2000 8:01:00 PM
From: wlheatmoon	Read Replies (1) \| Respond to of 42523

your main man..-g- multexinvestor.com Gruntal & Co.'s Joe Battipaglia Today's topic: Stay Invested---Fundamentals Still Strong There is little that can be said to provide instant comfort during or right after a sell-off. What can be said is that panics do occur and are generally poor leading indicators for the future performance of the economy and the stock market. Consequently, I remain committed to my belief that the market?s fundamental drivers---profit growth and low inflation---will provide the necessary basis for a recovery to new highs in U.S. financial markets. Of the 160-plus companies that reported during the first two weeks of April, 86% met or exceeded the expectations of analysts, and First Call now expects corporate earnings to grow 23% in the first quarter. The March consumer price index (CPI) data proved stronger than many had anticipated, with the core rate of inflation (excluding energy) rising 0.4%. However, this statistic alone does not paint a compelling picture for accelerating inflation, particularly on the heels of a noninflationary reading for the core producer price index, which rose just 0.1% in March. The increase in the core CPI rate can be explained by unsustainable increases in the public transportation and lodging components caused by higher fuel prices and by seasonal factors. Given the intensely competitive nature of the shipping, transportation, and hotel industries, I believe that the spikes will be temporary, particularly in the face of rapidly falling fuel costs, and I expect the increases to reverse themselves in the coming months. Finally, I would like to comment on the rumors and conjecture surrounding margin debt and leverage. While it is true that margin debt has grown during the past several years, the aggregate level (approximately $280 billion) remains less than 2% of total equity value. Offsetting this amount is an even larger increase in cash holdings. It is now estimated that money fund balances in the U.S. have grown to more than $1.7 trillion (11% of total equity value)---an increase of $580 billion from just two years ago. Add to this another $3-$4 trillion in certificates of deposits held at banks, along with an expanding monetary base, foreign capital, and other sources of liquidity, and the magnitude of the pool of liquidity for new investment becomes readily apparent.