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

To: J. P. who wrote (32367)	8/2/2000 4:38:10 AM
From: IQBAL LATIF	Respond to of 50167

Few important issues.... economy GDP Fed and impending doom.. <<For one thing, consumer spending, which accounts for two-thirds of GDP, expanded at only a 3 percent annual rate, vs. 7.6 percent in the first quarter. The big growth came from business, which invested big-time in equipment and software --- at a 21 percent annual rate. This is "new economy" stuff and should be good news for technology stocks once it sinks in. Construction spending also rebounded, as did significant business inventory building. The other big spender was the government, whose purchases soared at a 6 percent annual rate. Best of all, perhaps, the GDP "deflator" --- an inflation gauge that is a part of the report --- showed slower price growth: a 2.2 percent annual rate vs. 3.8 percent in the first quarter. On balance, the GDP report alone is probably not enough to persuade the Fed to raise interest rates again on Aug. 22 --- or to leave them alone. What will count is the economic news that comes out during August, starting with this week's barrage of July reports --- data more recent than the second quarter. >> On impending selling Richard Band said on June the 2nd.. <<Like many value-oriented investors, I've expressed concerns in recent years about the possibility that stock prices might be too high. However, my worries have diminished considerably in the past couple of months, for two reasons: Many of the Old Economy sectors of the market -- from banks and insurance companies to retailers, restaurants and REITs -- have already gone through a steep "correction" since the spring of 1998. Price/earnings ratios for a wide variety of Old Economy stocks are now quite reasonable on an historical basis. How can anybody complain, for example, about Ford Motor at 9X this year's estimated earnings, or Chase Manhattan at 11X? This is hardly "irrational exuberance." The sector of the market that was grossly overextended -- technology -- is well along on the road to correcting its excesses. For the past two years, technology stocks (especially the deficit-ridden Internet darlings) have bloated the U.S. stock market's overall valuation profile. But common sense is returning, thanks to the waterfall decline in NASDAQ since March. Dozens of formerly "hot" NASDAQ tech stocks have plunged 80%, 90% and even more in a matter of weeks. (I cautioned you as early as our February issue to expect just such a washout.) Meanwhile, the neglected Old Economy stocks are working their way back, slowly but surely. In short, it looks to me as if the market is once again cleaning up its act without the need for a broad collapse in stock prices. Over the past 20 years, we've had a string of speculative manias in various sectors of the stock market -- from oil, gold and personal computers in the early 1980s to genomics and the Internet today. In each case so far, the bubble sector deflated, but the rest of the market sustained only minor damage and soon recovered to new all-time highs. I think the same pattern will repeat this year and into 2001. >> My views are similar on the market direction..

To: J. P. who wrote (32367)	9/9/2000 12:40:48 AM
From: J. P.	Respond to of 50167

I was right. <eom>