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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (68006)	1/30/2001 6:40:28 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 99985

ZEEV: I know you are not forecasting a recession (certainly not a serious one) and neither are most other forecasters. But the Levy Institute -- whose record is better than most -- begs to differ. And one of the reasons they differ is the still unprecedently high valuation of the the US stock market THE UNDERESTIMATED RECESSION WILL BE LONG AND SEVERE Mount Kisco, NY, January 26, 2001— Recession, which began in November, will not end, at the earliest, until 2002 and will have unfortunate consequences that will last for years, according to the latest issue of The Levy Institute Forecast and Macroeocnomic Profits Analysis. The “underestimated recession” is a product of long-developing imbalances between the size of the economy and the magnitude of its debt and fixed assets, asserts the Levy Institute Forecasting Center, which publishes the monthly report. “The current situation also has a particularly threatening feature: the pathologically inflated corporate equity market,” notes the Levy Forecasting Center. The economy’s total asset value relative to income is much greater than on the eve of the 1989-93 period of financial trouble, when the 1980s real estate bubble was coming undone. The economy’s vulnerability to a stock market decline is unequaled in U.S. history, according to the Levy Forecasting Center. “Overall, the present situation involves the most formidable financial dangers since the 1930s.” Since recessions are always at least several months old before they are commonly recognized, it is not surprising that debate is underway about whether the economy is experiencing a soft, bumpy, hard or crash landing. The Levy Institute Forecasting Center invokes a metaphor it coined in the 1950s, to describe the transition from prosperity to recession: “When a long train rounds a curve, the locomotive completes the turn while the caboose is still traveling in the orginal direction. Similarly, some economic activities have begun to contract while others are still expanding.” David A. Levy, director of the Levy Institute Forecasting Center, reminds readers to “Respect the danger of the developing financial and economic storm.” ***************************** The Levy Institute Forecasting Center’s list of 10 developments to watch in the early ‘00s: 1. 2001 profits decline will be steep. 2. Recession and financial crisis abroad will last longer and be more severe than in the US. 3. Economic woes in countries such as Japan, China, and Russsia may have political consequences. 4. As the recession deepens, the record US trade deficit may impact trade and international relations. 5. The recession will have a domino effect that will cause a 2-3-year long credit crunch. 6. Modest deflation in goods and services prices may develop by 2002. 7. Interest rates will plunge. 8. Federal fiscal policy, especially income tax rules, may have a major effect on the economy of 2002. 9. The timing and extent of the consumer pullback will affect the depth and duration of the recession. 10. People may discover that the Fed is not omnipotent. ### In this month's Levy Institute Forecast... The Levy Institute Forecast, formerly known as the Industry Forecast, was established in 1949 by Jerome Levy and S Jay Levy and has been published

To: Zeev Hed who wrote (68006)	1/30/2001 7:48:11 PM
From: Logain Ablar	Read Replies (1) \| Respond to of 99985

zeev: consumer confidence is being shattered by all the layoff notices and the drop in net worth of middle america by the drop in the value of their investment portfolios. The layyoffs really started to pick up steam in November and people always cut back when they worry about employment. And the portfolios took the hit with the NAZ Sept to Dec. swoon. This did not start by Bush pointing out this started b/4 he was on board. the million $$ question will be if monetary and fiscal policy can turn the tide (if he can also get a tax cut through). interest rates alone won't cut it and the jury is still out on wheter both can turn the tide before we write off the 3rd quarter (which would be the 3rd consecutive calendar qtr of neg growth (imagine if they started it in Nov) Just a ramdom rant. I know you don't like the guy but hey I didn't like Gore so what the hey.