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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Voltaire who wrote (27735)	12/30/2000 7:38:20 AM
From: John Carragher	Respond to of 65232

the sad thing is it could have been prevented. I feel not for our losses this year as we may have a base for next year. It is the folks who came in at the end thinking the market was the answer to their retirement savings etc. Many of these folks are now broke , out of the market, or will be when they get their mutual fund statements. Hope Greenspan attempts to turn this around with a sufficient rate reduction rather than .25 points and more pain...Happy New Year.

To: Voltaire who wrote (27735)	12/31/2000 11:13:43 AM
From: Uncle Frank	Read Replies (1) \| Respond to of 65232

The New York Times gets it. You should make Gretchen an honorary Porcher. Message 15102540 uf

To: Voltaire who wrote (27735)	12/31/2000 1:10:33 PM
From: stockman_scott	Respond to of 65232

Stage Set for Bulls to Return in 2001 By Jan Paschal Sunday December 31, 8:54 am Eastern Time NEW YORK (Reuters) - Don't look now, but the stage is set for the bulls to run down Wall Street once more in 2001. No, they won't kick their heels up as high or run as fast as they did in the past five years. But the bears will be put to sleep sometime in the first half of the new year and the bulls will rule again, market experts predict. Driving the market's comeback will be attractive stock prices, more money flowing early in the new year, plus likely lower interest rates and a tax cut to revive the economy, market strategists say. ``The stock market is about as undervalued as I've seen for quite some time,'' said Hugh Johnson, chief investment strategist for First Albany Corp. ``The broader market, the S&P 500, is about 12 percent undervalued, which just means on average that stocks are trading at levels that are arguably cheap.'' Not all stocks are cheap, of course, Johnson cautioned. But ``it's easier to get a rally when stocks are undervalued,'' Johnson said. ``A lot of investors feel a lot more comfortable buying IBM and Microsoft at these levels.'' International Business Machines Corp. (NYSE:IBM - news) now trades for about $85 a share, down from its 52-week high of $134-15/16 and not far above its year low of $80-1/8. Microsoft Corp. (NasdaqNM:MSFT - news) is trading for about $44 a share, down from its 52-week high of $119-15/16 and, like IBM, not far above its year low -- in this case, $40-1/4. Both IBM and Microsoft are among the 30 stocks that make up the Dow average, while Microsoft is one of the most heavily weighted stocks in the Nasdaq composite. 2001: ``A GOOD YEAR FOR STOCKS'' ``It will be a good year for stocks,'' Johnson said of 2001. ''But you're going to need to be good at timing. I think it will be weaker in the first half and stronger in the second half. ``The big assumption, of course, is that the economy only slows, with no recession, and earnings continue to grow, albeit at a much slower pace.'' For every bull whose portfolio got gored in 2000, Johnson's words are welcome ones, indeed. For 2000, the Standard & Poor's 500 Index (.SPX) is on track to finish about 9.6 percent below its 1999 close. The Dow Jones industrial average (.DJI) is poised to end 2000 about 5.7 percent below its close on Dec. 31, 1999. The tech-driven Nasdaq Composite Index (.IXIC) is closing out the year about 38.6 percent below its 1999 settlement -- and over 50 percent below its March 10, 2000, record close of 5,048.62 -- making this the worst year in the Nasdaq's 29-year history. So why will 2001 be better? ``The headwind the market faced in December -- with that headwind consisting of tax-loss selling and (profit) warnings from companies -- is beginning to let up,'' Johnson said. ''That's somewhat encouraging.'' The so-called ``January effect,'' which combines a year-end rally with a rise in stocks in the first month of the new year, will help get 2001 off to a good start, Johnson said. A lot of money will be flowing, in the form of year-end bonuses paid in January and funds flowing into (401)k plans and other pension plans. All that cash needs some place to go and one of the most likely places is the stock market, Johnson pointed out. ``The Federal Reserve will be reducing interest rates at some point in the first half'' of the year, Johnson said. ``Sometime in the first half, the bear market will end and a bull market will begin,'' he predicted. A FRIENDLY FED AND A TAX CUT IN THE WINGS Anthony Chan, managing director and chief economist of Banc One Investment Advisors, said policy, shaped by a friendly Federal Reserve and the Republican President-elect George W. Bush, will give bulls more than a helping hand in 2001. ``We've already seen the Fed fast-forwarding to an easing bias,'' Chan said. At the Dec. 19 meeting, the Fed's policy-making body, the Federal Open Market Committee (FOMC), ``bypassed the 'neutral' directive and went right to an easing bias,'' Chan said. ``That tells me they're on a one-way train to easing -- ASAP.'' An interest-rate cut could occur before the FOMC's next meeting on Jan. 30-31 -- if the December unemployment rate is ``north of 4.2 percent and we get a gain below 50,000 in non-farm payroll'' jobs for the month, Chan said. The December employment report is scheduled for release on Friday, Jan. 5. Otherwise, both Chan and Johnson expect the Fed will cut interest rates in January and again in March. On Jan. 20, George W. Bush, the former governor of Texas and the son of former President George Bush, will be sworn in as the 43rd president of the United States. A promised tax cut, of course, played a central role in George W. Bush's campaign for president. ``Possibly, there will be a tax cut, by the middle of the year,'' Chan said. ``I see the consensus on the tax cut rising. ``I see it now north of $500 billion, or half a trillion dollars, that is, the size of the tax cut over 10 years.'' Bush has proposed a tax cut of $1.3 trillion and ``he says he'll keep explaining it until people understand it,'' Chan added. ``This is very bullish for the overall stock market,'' Chan said, referring to the combination of lower interest rates and a tax cut. ``It's positive for the economy.'' But it won't all be smooth sailing for the stock market, he warned. ``There will be a tug of war in 2001 between two forces -- policy and profits,'' Chan explained. ``The fundamentals, with respect to policy, will improve. We have positive fiscal policy in the cards. And we have easier monetary policy ahead.'' The reality check will come from Corporate America's report cards, otherwise known as quarterly earnings reports. ``We'll see profits growing only 5 percent to 7 percent for all of 2001, compared with 2000, for earnings per share of the companies in the S&P 500,'' Chan said. That's in contrast with 2000, when ``we saw profits still rising, but stocks were underperforming,'' he added. The torrent of companies warning in 2000, especially in the third and fourth quarters, that profits and revenues would be below their own forecasts or Wall Street's expectations drove stock prices down to new lows, in many instances. In 2001, ``there's an end in sight to the nightmare. ``We'll probably see a 6 percent to 8 percent gain in the share prices of the S&P 500 companies in 2001,'' he predicted. HOW LOW WILL THE FED GO? It's hard to picture Fed Chairman Alan Greenspan dancing the limbo. But Greenspan and his merry band of Fed policy-makers have all but shouted their intent to loosen up monetary policy in the near future. ``In January, they could go as much as 50 basis points,'' Chan said, noting that such a move would bring the fed funds rate target down to 6.0 percent. If that happens, Chan predicts the Fed will enact another rate cut of 25 basis points in March. ``But if they only do 25 basis points in January, then they'll do 50 in March,'' Chan said. First Albany's Johnson said he believes the FOMC will lower the fed funds rate target to 6.25 percent from its current 6.50 percent level in January, although ``they might go to 6 percent.'' He agrees with Chan that the December non-farm payrolls figure ''will be very important in guiding the Federal Reserve. ``If the economy remains as soft as it is now, then yes, following up at their March meeting, the Fed will cut again. By the second quarter, 6 percent will be the fed funds target.'' 2001 SHAPING UP AS ``A TRANSITIONAL YEAR'' The flip of the calendar to Jan. 1, 2001, will mark the start of ``a transitional year,'' in Chan's opinion. ``The easing'' that the Fed does in 2001 ``will impact the economy the most in '02. And the tax cut will impact the economy mostly in '02.'' Any gains by the stock market in 2001 or 2002 are likely to ''pale in comparison with what we saw in 1995 to 1999,'' when double-digit gains per year were the norm. In 2002, ``stock prices will rise in excess of profit growth,'' Chan said. That's because there's usually a lag, often described as about nine months, between Fed action and the full impact on the U.S. economy. So it will take until 2002 for the Fed's expected two rate cuts in 2001 to start showing up in improved earnings and better stock prices, Chan said. ________________________________________________________ V: I hope you and all 'the porchers' have a great New Years Holiday. Best Regards, Scott

To: Voltaire who wrote (27735)	12/31/2000 8:22:59 PM
From: Vendit™	Respond to of 65232

Voltaire My best wishes to you and all of the porchers for a happy and prosperous New Year. Do you remember this old friend of many on SI?------=>>>>>>>>> askresearch.com The above chart shows consistency as well as a certain amount of safety via a PE. All IMHO of course. Reid

To: Voltaire who wrote (27735)	1/1/2001 5:37:44 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Analysis: Could Recession Spoil the Party? Monday, January 1 By Caren Bohan WASHINGTON (Reuters) - Just weeks after Vice President-elect Dick Cheney warned of a possible recession in the United States, the R-word -- unthinkable at the beginning of buoyant 2000 -- is grabbing headlines and airtime as sliding stock prices and disappointing holiday sales fuel fears about the economy's health. Is the talk of a recession as the villain of the new year overblown? While some economists state firmly that it is, several of Wall Street's huge investment firms have been scurrying to slash economic growth forecasts and are boosting the likelihood that a sharp U.S. downturn could hit sometime in 2001. Economists at many major firms say that, while the odds still favor a ``soft landing'' of slower growth but no recession, the mighty U.S. economy appears more vulnerable now than at any time since the record-breaking expansion began 10 years ago. ``Recession is not in my forecast, but it's a real risk,'' said Richard Berner, chief U.S. economist at Morgan Stanley Dean Witter. ``We are one shock away from a recession.'' Economists rarely go out on a limb to actually forecast recessions -- defined as two quarters of economic contraction -- which usually result from a combination of negative events, or ``shocks.'' For example, many experts blame the 1990-91 recession on the oil-price spike caused by the Gulf War and a credit crunch spurred by the savings and loan crisis. Instead, economists talk in terms of recession odds. Many Wall Street firms have ratcheted up the chances of a contraction over the next 12 months to 25 to 40 percent, versus 5 or 10 percent that firms saw a year ago. DOT-COM BUST A bust in dot-com stocks, a tightening of corporate lending standards and higher energy prices are among the factors that are taking their toll on the economy. The stock market -- which helped drive the bumper consumer confidence and heavy spending of recent years -- is taking a big bite out of growth as the dwindling portfolios of upper-income consumers cause them to slash their spending. Businesses also have reduced access to capital, forcing them to cut expenditures on costly plants and equipment. On the bright side, the housing market -- bolstered by low mortgage rates -- is holding up well while consumers, whose confidence has eroded sharply, still hit the stores for a last-minute flurry of Christmas buying that may save holiday retail sales from being as dire as earlier reports suggested. Low U.S. inflation affords the economy a safety net, too, because it gives the Federal Reserve more leeway to cut interest rates without having to worry about a destabilizing run-up in prices. Those who have expressed skepticism about the prospect of a decline in gross domestic product point out that only six months ago the economy, in the second quarter of 2000, was surging ahead at an annual pace of 5.6 percent. It would be unusual for growth to taper off completely after years of clocking speeds of 4 percent-plus. In the third quarter, growth cooled to 2.2 percent. Fourth-quarter gross domestic product figures aren't available yet. ``All this talk about recession or near recession is way overdone,'' said Ken Goldstein, economist at the Conference Board research group. ``In fact, it's bordering on irresponsibility.'' In the political sphere, Clinton administration officials have leveled charges of irresponsibility at President-elect George W. Bush and Cheney -- who has since softened his comments about a recession to warn of an economic slowdown. Clinton's economic officials have accused the Bush team of trying to ``talk down'' the economy in a bid to push a proposed $1.3 trillion tax-cut plan. They have also said Bush was needlessly arousing fear in consumers. But the Bush camp counters that it is offering ``straight talk'' about real risks facing the economy. Bush plans to hold a two-day forum on Jan. 3-4 to discuss the state of the economy. Some economists have said Bush's warnings of a slowdown may be contributing to the problem, but others dismiss that idea. ``People don't listen to politicians for guidance on what's happening to the economy,'' said James Glassman, economist at Chase Securities in New York, who said what matters most for consumers is whether they have work and how much money they have in the bank or in stock portfolios. A SUDDEN SHIFT Glassman's firm predicts the economy will grow by around 1 percent in the first half of 2001, skirting a recession but just barely. Some economists label speed this slow a ``growth recession,'' where growth is still occurring but the country still suffers keenly as jobs are lost and spending falls off. Whether or not they see a contraction, economists have been struck by the suddenness of the economy's loss of momentum. ``The deceleration in economic activity is the largest we've seen since 1981-82,'' Morgan Stanley's Berner said, referring to the recession at the beginning of the 1980s that came on the heels of double-digit inflation and an aggressive campaign by the Federal Reserve to crack down on high prices. Highlighting the speed of the deceleration, the Fed on Dec. 19 made a dramatic shift in its official economic outlook. The Fed, which at its November meeting said inflation and an overheated economy represented the greatest threat to the expansion, switched its view to cite economic weakness as the most significant risk. It passed over a more gradual option in which it could have said inflation and economic weakness were equal risks. But the U.S. central bank also avoided a more aggressive alternative: trimming rates immediately at the December meeting. It may yet end up regretting the decision to hold its fire, which caused days of selling in the stock market. However, many economists think the Fed can quickly make up for lost time. The bond market, which often prices in Fed moves ahead of time, is assuming sharp rate cuts on the order of a percentage point or more over the next 12 months. ``I think the Fed's going to ease aggressively starting early in the year and I think that -- plus the fact that market rates have come down as much as they have -- I think will be enough to enable the economy to avoid a recession,'' said Marty Mauro, senior economist at Merrill Lynch.