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Strategies & Market Trends : Piffer OT - And Other Assorted Nuts -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (46633)	7/25/2000 9:48:20 AM
From: Rich1	Respond to of 63513

Great news DAWG,good luck to you. Here's some research I got from Paine Webber today.Hope it's of interest to the thread: Levels on the indices are taken intra-day July 24, 2000. More information available on request. The information contained herein is based on sources we believe to be reliable, but its accuracy is not guaranteed. PaineWebber Incorporated and/or Mitchell Hutchins Asset Management Inc., affiliated companies and/or their officers, directors, employees or stockholders may at times have a position, including an arbitrage or option position, in the securities described herein and may sell or buy them to or from customers. These companies may from time to time act as a consultant to a company being reported upon. Copyright © 2000 by PaineWebber Incorporated, all rights reserved Investment Policy Edward Kerschner 2001 Yearend Normal Value Estimate S&P 500: 1750 While stocks remain modestly attractive on a P/E basis (i.e., bogeyed versus inflation), and the earnings outlook remains favorable, stocks are still overvalued relative to bonds and cash. However, with the Fed’s tightening cycle seemingly close to an end, those unfavorable asset allocation relationships should improve as the fixed income markets realize that “it’s over before it’s over.” While volatility is running at a record high for the S&P 500 (and the DJIA) in 2000, for the NASDAQ volatility is “off the charts.” The average of absolute daily price changes in the NASDAQ since 1971, in percentage terms, is 0.67%, much the same as the S&P 500. In the first half of 2000, the average absolute daily price change was 2.56% or almost four times the long-term average level of volatility. In other words, while a 10-15% gain can be had in the S&P in less than a month, a 10-15% gain can be had in the NASDAQ in less than a week! Long-term outlook: Still favorable. U.S. financial market environment perfect: budget surplus, low inflation, consistent profit growth, i.e., there is little fundamental risk. But with stocks already close to fair value on a P/E basis, this perfection is largely “in the price.” Higher volatility and lower returns mean calendar performance measurement becomes arbitrary. And given that higher volatility and lower returns also means that most of the year’s stock price appreciation will occur in just a few days, there will just be a few days each year that investors feel “smart.” The rest of the time, expect to feel stupid. Economics Maury Harris 2000 Fed Funds Target: 7.0% Discount Rate: 6.5% 2000 GDP Estimate: 3.0% 2000 CPI Estimate: 3.5% On 7/28/00 we now expect that it will be reported that annualized quarterly real (inflation-adjusted) Gross Domestic Product (GDP) output growth in the recently completed Q2 probably slowed from the very fast 5.5% in Q1 to 3.0% instead of our earlier 4.0% forecast. Important reasons for much slower Q2 growth are a more than earlier anticipated slowdown in consumer spending, a likely temporary decline in public works spending and surging imports. Looking ahead, we still expect growth near our earlier projections of 3.8% in H2(00) and 3.3% in 2001. One key to our projections of just moderate slowing is likely decent income formation from higher wages and just a limited job growth slowdown. Also, there should still be good business equipment demand and healthy export growth. Fundamentally, financial market variables (e.g., interest rates) have not changed dramatically enough to suggest a radically slower sustained rate of economic growth. So far in the first half of 2000, the Consumer Price Index (CPI) has risen at a 4.2% annual rate after rising 2.7% last year. Since our leading inflation index rose last year, we have been expecting CPI inflation to pick up to 3.5% this year. The recent apparent peak, though, in our leading inflation index in April suggests lower upcoming inflation, and for 2001 we currently expect more moderate 3.0% CPI inflation. Small Cap Stocks Mary Farrell S&P Small Cap Index: 212.61 Russell 2000 Index: 522.17 As We See It – July 24, 2000