CFZ, John Pitera etc threads condensed......
From: JRI Thursday, Apr 19, 2001 5:50 PM
View Replies (1) | Respond to of 96567
Heinz....sorry to keep asking, but one last clarification...
Are you more inclined to believe that tomorrow could be the cycle high of the 23rd (one day early) signaling a high....OR are you leaning toward it being the 19th turn (a day late), and we only TURN DOWN into 23rd (or 24th, if it comes early)...
Or is it impossible to know?
(BTW- If 23/24th is a low...that means the stuff we've seen the last 2 weeks goes on for another week and a half...that means stocks going up 150% in a month, etc...that seems almost absurd)..
To:JRI who wrote (96504)
From: heinz blasnik Thursday, Apr 19, 2001 6:26 PM
Respond to of 96543
impossible to know...and absurdity is this market's normal state of affairs. it's not really a market...it's a pokemon card game for big kids...-g-
i'm really considering that this might have enough momentum to carry into May 2 with little interruption...otoh, all the delta hedge supply from this expiration should come back into the market next week, so it probably won't be quite as exuberant if it happens. believe it or not, the TRIN is now more overbought than at the top in March 2000.
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Personal Capital: The backloading boom
By Eric Moskowitz
Red Herring
April 12, 2001
Don't expect technology firms, especially software companies, to blow away their numbers in this first-quarter earnings season. "There's just no point," Broadbase Software (Nasdaq: BBSW) CEO Chuck Bay tells me. "Wall Street and investors aren't impressed, so companies are backloading contracts so they will have them ready for the third and fourth quarters."
Software companies always backload (or backlog) contracts, but technology executives in other industries are now saying the same thing. "We're backloading as much as we can for the second half of the year," says the chief financial officer of a hardware company I recently spoke with. "Investors are kind of shell-shocked right now, so they kind of don't react -- whether our quarter misses or beats [analysts' earnings expectations]."
The rationale actually makes a lot of sense in a saving-good-things-for-a rainy-day sort of way. Backloading key contracts will also help a company put up boffo third- or fourth-quarter results that could get momentum investors, who have been in hibernation all winter, excited again.
Rich Frick, a partner at consulting giant Ernst & Young, says that this backloading concept may already be spreading into mergers and acquisitions. Of course, the M&A world hasn't come to a complete halt. Broadbase, as a matter of fact, agreed to merge with Kana Communications (Nasdaq: KANA) on Monday. But Mr. Frick says there really is little benefit for companies announcing deals this quarter, given the market environment. And he adds that many companies aren't in any sort of position right now to execute deals.
All this backloading may be good news for investors in the second half of the year. But it could also be yet another misleading indicator for hemorrhaging technology investors to cling to. Sorry, but by backloading these deals in this environment, companies also are placing a big bet that they will hold up in the event of a continuing downturn. Stay with me here: if a company has a contract with a customer but doesn't officially put it on the books, the company is essentially taking a chance that the deal could evaporate between now and, let's say, September. What if the customer in question goes belly-up this summer?
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A Cautionary Tale From Japan
By Don Luskin
Special to TheStreet.com
Originally posted at 7:23 AM ET 4/18/01 on RealMoney.com
Two weeks ago on April 5, the day after the Nasdaq bottomed at 1619.58, I wrote about what might happen if today's post-boom-and-bust U.S. equity markets followed the same course as Japan's markets did, after their whiplash in 1990. Here's an update -- and some food for thought.
Using strictly quantitative analysis, the rally we're enjoying right now, roughly a year past the market's top, is perfectly following the pattern of timing and magnitude set by Japan's Nikkei 225 in 1991, roughly one year past that market's top. If that pattern continues to play out, then by June the S&P 500 will rally to 1326 -- another 11.3% from here. The Nasdaq will rally to 2104 by June -- another 9.4% from here. That will make for richly rewarding rallies in both indices: From the March 22 bottom, that will be 22.7% for the S&P, and from the April 4 bottom, that will be 32.2% for the Nasdaq.
I hate to rain on your parade, but if the Japanese pattern holds, these will be nothing more than bear-market rallies: The worst is yet to come. Quantitative analysis of the Japanese pattern shows that by November 2002, the S&P 500 will fall to 1095 and the Nasdaq will fall to 690. That's right, 690 -- I didn't leave a digit out.
Living in a Qualitative World
Fortunately, there's more to economics than the merely quantitative -- despite the compelling illusion of precision that quantitative analysis can give. The reality is that we live in a qualitative world. And however much the patterns of the U.S. markets in 2001 seem identical to those of the Japanese markets in 1990 when you just look at the numbers, qualitative differences mean that we are not predestined to follow their sorry fate.
"History rhymes, but does not repeat itself." That's the opinion of Reuven Brenner, who is probably the world's foremost qualitative economist (and a colleague of mine, as a member of the MetaMarkets Think Tank). Brenner says, "Japan's downfall started with an extraordinary increase of cap-gain taxes on real estate and increases in many other taxes." And he blames a decade of tight monetary policy for Japan's persistent post-crash deflation. But for Brenner, the causes of the Japanese crash -- or ours -- aren't what's important. "The issue isn't even these mistakes, but why they were not corrected. That has to do with Japan's rigid political institutions and closed financial markets."
Brenner's new book, The Financial Century, blasts the economics profession for its obsession with the spurious exactitude of quantitative analysis, such as my comparison of the Nikkei, the S&P and the Nasdaq. Brenner is more interested in the qualitative preconditions that are necessary for economic success, especially open financial markets. Brenner observes, "The three big innovations that brought about the Renaissance in Europe -- the printing press, the compass and gunpowder -- all originated in China centuries before." So why did China fall behind as a world power while Europe surged ahead? Brenner explains, "It is the financing of technical know-how that matters, not know-how itself." Europe developed open capital markets that encouraged and rewarded investment, risk-taking and innovation -- and China did not.
Important Differences
The same goes for the U.S. and Japan. Brenner argues that U.S. businesses and government financial institutions -- such as the Federal Reserve -- make just as many mistakes as their counterparts in Japan or anywhere else. But the U.S. is in a better position to quickly recover from those mistakes and learn from them. That's because our open financial markets are quick to reward winners and punish losers, with minimal or artificial interference by government. And it's also because our government financial institutions are transparent and accountable. In Japan, government distorts the discipline of the market by picking the winners and subsidizing them, and by keeping losers from failing. And its government institutions -- such as the Bank of Japan -- are opaque and largely immune to criticism.
So take my quantitative analysis of the Nikkei, the S&P 500 and the Nasdaq for what it's worth: an interesting cautionary tale, something to help us learn from the mistakes of others who have gone before. But at the same time, before I'm ready to say that this rally is anything more than a Japan-style bear-market rally, I want to see the evidence that we really are learning. And I don't see it yet.
In the meantime, if you want to deeply understand how the learning process in markets work, read Brenner's The Financial Century. It's just been published in Canada by Stoddart, and it will be available in the U.S. later this year.
thestreet.com
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From: heinz blasnik Thursday, Apr 19, 2001 7:39 PM
View Replies (1) | Respond to of 96596
you may well be right...note, the LatAm periphery is beginning to groan more and more due to the ongoing Argentinian crisis...it has now become a Brazilian crisis too. it may not mean anything to WS, which is now in a state of "euphoria" (Pisanti said that, not me), but i take it as another sign that the global slowdown is worsening...in the meantime, the US financial system is clearly dangerously unstable...the market volatility (it doesn't matter in which direction the market is volatile)increases more and more. i can't help thinking it is building towards some sort of crescendo. anyone looking at a money supply chart should be able to realize that something isn't right. btw, i take the recent dollar slide as a sign of two things (provided it's really the start of a trend and not just another correction): one, the Euro carry trade is forced to unwind, and two, the Fed has managed to finally deal confidence a real blow...forget the reaction of the stock market for a moment, since the current crop of money managers that has known only the mania is not exactly the brightest bunch (in case someone thinks i'm unduly arrogant, the evidence is paraded on TV, day in and day out). the dollar is far more important a gauge...next time someone from the administration comes out to 're-affirm' the 'strong dollar policy' (what, pray tell, is that, actually? part of the 'free market'?) and the dollar reacts by heading further south, we'll know it's TILT time.
the yield spread between TIPS and notes/bonds is widening too, indicating an increase in inflation expectations.
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Gasoline futures hit a 9 month high, refining margins are exploding:
quote.bloomberg.com.
Gasoline for May delivery rose 0.81 cent to $1.0686 a gallon on the Nymex,
closing at a nine-month high for the fifth time in the past seven sessions. Prices
are up 36 percent this year. Futures represent wholesale prices.
``Gasoline supplies are still too low,'' said Phil Flynn, vice president and senior
market analyst at Alaron Trading Corp. in Chicago. ``Prices on the Nymex will
easily exceed $1.11 before Memorial Day, exceeding last summer's high.''
Prices rose partly because of an unexpected shutdown of a unit at Valero Energy
Corp.'s Corpus Christi, Texas, refinery. The company didn't say when the unit
would return to service.
``It's a thinly supplied, nervous market, and any problem with a refinery is going
to boost prices,'' said John Kilduff, senior vice president of energy risk
management at Fimat USA Inc. in New York.
High Profit Margins
The steeper rally in gasoline compared with crude oil this year has left refinery
profit margins high, and will entice refiners to boost motor-fuel production,
analysts said.
Gasoline is now worth about $17 a barrel more than the cost of crude oil, up from
about $2.50 in mid-December, based on futures prices. |
