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Strategies & Market Trends : Drillbits & Bottlerockets -- Ignore unavailable to you. Want to Upgrade?

To: Junkyardawg who wrote (4774)	3/1/2001 10:30:56 AM
From: Rich1	Respond to of 15481

Guy on the radio last night who is a local economist had this to say about Greenie... <February 28th, 7:25 p.m. Greenspan Disappoints Market -- Nasdaq Down 56 And Dow Loses 141 -- Intermeeting Rate Cut Doubtful Personally, I am waiting for the world to recognize the failure of Alan Greenspan as an economist. When he headed the Council of Economic Advisors under Ford, his method of fighting inflation was for all of us to wear buttons saying WIN -- Whip Inflation Now. Great economic theory! He engineered the 1987 bear market in Dow Jones (down 40%) in four months. He created the 1990 recession and bear market. Yet the cringing politicians keep thanking him for his management of the economy. Today he had very little change to his testimony of two weeks ago. Wayne Angell of Bear Stearns expressed his regrets about his 80% projection for a 50 bp rate cut this week, saying he is looking at economic factors that Greenspan apparently refuses to worry about. He said Greenspan is unrealistic and that monetary policy is exceedingly tight. His words -- not mine. Angell is diplomatic. He has to be. I don't. Greenspan is blind to the evidence. Today's report for Q4 came in at the slowest pace in five years, up just 1.1%. That's more than half of what Greenspan himself considers its potential. Yet, he maintained that consumers are behaving in a manner different from the reports. He said sales of autos and homes belies the consumer sentiment reports. And apparently he is not taking a recession message from the market very seriously either. He used the now tiresome cliche that the market has predicted five of the last two recessions. I would remind him that two did occur. Many economists voiced considerable disagreement with his still upbeat view of the economy. He maintains the second half will be better. Then why isn't the market responding NOW? Not only did he destroy hope for a rate cut very soon, but also, in the view of some economists, hinted that the March 20th meeting might see less than a 50 bp cut. Nasdaq was up about 31 shortly after 10 a.m., but when news came out about his testimony, down it went and down it stayed, losing 56, another 2-year low, closing at 2151.82. For February Nasdaq lost 22%, its third largest monthly loss in history. And "the man" is still optimistic?! Weakness was not confined today to just Nasdaq. Dow Jones gave up 141.60 at 10495.28. S&P lost 18. (Where is Ms. Cohen and her previous argument several months ago that the S&P was fairly valued??) After the close we got two more warnings. One from Gateway, saying Q1 will be break even. Analysts were looking for a profit. The company also said it will have to restate all of last year's earnings also. The second warning came from 3COM, saying Q3 will be substantially lower in terms of revenues and earnings. But, don't worry. After all Greenspan is still optimistic -- and isn't that the important thing?? Why pay attention to the scores of warnings we've had -- to a 58% drop in Nasdaq? He is still upbeat. He isn't worried -- just said the downturn hasn't run its course, but we'll be OK by the second half. Amazing! Meanwhile investor confidence is at rock bottom. Of course one day it will change and all this will be a memory and good for story telling to newcomers into the market. The only problem for present-day investors is the question whether they will still be in the market when things do change. About the only thing we can look forward to now is just bargain hunting -- maybe some short covering. This problem is going to take time. The only thing to cure time is to have some catalyst, some ignition to jump start confidence. What is it? I'm open to suggestions because I don't know. I just have to rely on time. > cbelida@netdor.