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To: Jim Willie CB who wrote (36454)	4/28/2001 4:19:40 PM
From: stockman_scott	Respond to of 65232

More constructive action for stocks _____________________________________________________ Market gets evidence that economy still hanging on By Julie Rannazzisi, CBS.MarketWatch.com Last Update: 6:04 AM ET April 28, 2001 <<NEW YORK (CBS.MW) -- The stock market closed out the week in a constructive fashion, with a broad number of groups displaying strength amid evidence that the U.S. economy isn't exactly wilting. Investors got compelling pieces of data, notably gross domestic product Friday and housing numbers earlier in the week, to support the theory that the economy may turn the corner in the second half of the year. "This week has turned out to be an excellent follow-through to last week's sudden strength. Thus far, the move has been fairly steady and controlled, with good gains, and without running up some excessive bullish sentiment," said Dain Rauscher's Robert Dickey. Even more compelling is the fact that the advance-decline line has been improving, suggesting the rising tide is lifting more and more boats. Dickey added that stocks are generally doing better than it appears, as most of the focus is still on the big-cap tech names, which are working their way higher in some pretty choppy patterns. He notes that numerous stocks are breaking out of longer-term trading ranges, with bullish patterns common among the big oils and the restaurants. "The groups that nobody wanted to own when technology was going up are the source of many buy tickets on Wall Street these days," echoed John Zaro, managing member at Bourgeon Capital Management. The Dow Industrials ended the week up 2.2 percent while the Nasdaq slipped 4.1 percent. Still, the tech-drenched index is up a neat 28 percent from its 2001 nadir set in early April. Data supports a rebound Cary Leahey, senior economist at Deutsche Bank Alex. Brown, said the GDP figure indicates that a very large inventory adjustment has occurred, which supports the theory of a "V"-shaped recovery for the U.S. economy. But he doesn't believe the strong GDP figures will diminish Fed aggressiveness on the easing front as long as the labor market remains soft. The economist said the central bank is first and foremost concerned with weakness in the labor market. "The market has taken the recent reports -- the housing numbers earlier in the week and the GDP Friday -- as an indication that the economy is bottoming out. [The data] support the view that the Fed's rate cuts are working and that growth will improve in the second half of the year. That's key for the stock market," remarked Peter Boockvar, equity strategist at Miller, Tabak & Co. "But this doesn't mean we're out if the woods. While there are glimmers of hope, the situation isn't clear cut," he added. The main buzzword among corporations, in fact, continues to be "lack of visibility." Earnings and data watch So far, 81 percent of S&P 500 companies and 26 out of the Dow's 30 stocks have reported results. First Call/Thomson Financial said there seems to be no meaningful change in the patterns of negative pre-announcements and downward revisions in earnings estimates as the first-quarter earnings season winds down. "The most ominous trends continue to be the level of second quarter negative pre-announcements and the rate of downward revisions in fourth quarter 2001 earnings estimates for the technology and basic materials sectors. The most favorable trend continues to be the limited number of negative pre-announcements and minimal downward estimate revisions in the consumer cyclical sector," the earnings compiler noted. Since April 1, First Call said there have been 242 warnings for the second quarter. Among the companies unveiling results next week: Priceline.com, Perot Systems, Nextel Communications, Procter & Gamble, Tyson Foods, Triton Energy, Cirrus Logic, Jones Apparel, CVS, Barrett Resources, Cigna, Sapient, Suiza Foods, Revlon and John Hancock Financial. The centerpiece on next week's economic calendar is Friday's employment report for April. Also on tap: March personal income and personal consumption expenditures, March construction spending, the April National Association of Purchasing Management Index and March factory orders. View Economic Preview and economic calendar and forecasts. Friday's trading activity A robust gross domestic product report, which indicated the U.S. economy is holding its own, gave the bulls reason to cheer and sent the major averages sharply higher Friday. GDP rose 2 percent in the first quarter, much more than the 1 percent rise that had been expected. Fourth-quarter GDP stood at 1 percent. See full story. Checking sector activity, chip, networking and hardware issues were the front-runners in the tech sector while the broad market saw nice gains in the retail, biotech, financial, gold and transportation segments. Moving lower were the utility, natural gas and oil service groups. View latest market stats. The Dow Jones Industrial Average ($DJ: news, msgs, alerts) ascended 117.70 points, or 1.1 percent, to 10,810.05. Underpinning the Dow were advances in shares of American Express, Citigroup, Intel, J.P. Morgan and Wal-Mart. Two Dow stocks -- Alcoa and Caterpillar -- reached fresh 52-week highs on Friday. Among the few losers were Microsoft, Walt Disney, and Eastman Kodak. The Nasdaq Composite ($COMPQ: news, msgs, alerts) rallied 40.82 points, or 2.0 percent, to 2,075.70 while the Nasdaq 100 Index ($NDX: news, msgs, alerts) swelled 47.14 points, or 2.7 percent, to 1,810.47. The Standard & Poor's 500 Index ($SPX: news, msgs, alerts) added 1.5 percent while the Russell 2000 Index ($RUT: news, msgs, alerts) of small-capitalization stocks gained 1.3 percent. Volume came in at 1.08 billion on the NYSE and at 1.80 billion on the Nasdaq Stock Market. Market breadth was decidedly positive, with advancers trouncing decliners by 20 to 10 on the NYSE and by 24 to 14 on the Nasdaq. Elsewhere, Trim Tabs estimated that all equity funds had inflows of $100 million over the week ending April 25 vs. inflows of $2.2 billion in the prior week. And equity funds that invest primarily in U.S. stocks had inflows of $1.6 billion compared with inflows of $3.2 billion in the prior week. In the Treasury space, the 10-year Treasury note slid 31/32 to yield ($TNX: news, msgs, alerts) 5.325 percent while the 30-year government bond tumbled 1 9/32 to yield ($TYX: news, msgs, alerts) 5.805 percent. See Bond Report. In other economic news, the April Michigan consumer sentiment index stood at 88.4 in its final revision from March's 91.5. And March housing completions fell 6.1 percent to a 1.49 million rate. In the currency arena, dollar/yen put on 0.7 percent to 123.97 while euro/dollar slid 1.4 percent to 0.8902.>>

To: Jim Willie CB who wrote (36454)	4/28/2001 6:43:59 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Stocks View: Slowdown or Ugly Recession? Apr 28 3:53pm ET By Pierre Belec <<NEW YORK (Reuters) - The U.S. economy is changing and Wall Street is telling those bruised investors that there may be something more serious ahead than just a run-of-the-mill slowdown. After being pumped up for five years, stocks have crumbled over the past 12 months. Despite several recovery attempts, a lot of investors still sense that the economic environment is rapidly deteriorating and the nation could be slammed by a recession. "Avoiding a recession at this stage in the U.S. would be unprecedented, given the reading we now have," says Lakshman Achuthan, managing director of the Economic Cycle Research Institute (http://www.businesscycle.com). "In fact, our weekly leading indices look worse now than they did during the recession of 1990 when we last called a recession," says Achuthan. "Never in the past have our indices looked as bad and we've been able to avoid a recession." If Achuthan is right, there would seem to be little that Alan Greenspan, the nation's Maestro of economics, can do at this stage of the game to prevent a recession from stunning the world's once healthiest economy. What is the Economic Cycle Research Institute's claim to fame? For one thing, its founder was Geoffrey H. Moore, "Father of Leading Economic Indicators," a monthly gauge that forecasts trends in the economy three to six months in advance. Moore's other credit is that he was Greenspan's economics teacher at New York University. GLOBAL CONTAGION? In a preliminary report, the Commerce Department said on Friday the gross domestic product rose by a surprising 2 percent annual rate, as strong consumer spending offset weakness in business investment. But some analysts thought that the first of a series of estimates of the nation's growth disguised weakness in key areas of the economy. The thinking was that the way the economy is going, GDP could be scaled back later. With the world's biggest economy shaky, there's also the danger that the global economy could be taken down, the research firm says. The International Monetary Fund chimed in this week to say that the global economy was at a critical juncture. "The world economy is certainly in a quite critical phase," IMF Managing Director Horst Koehler told the group's spring meetings in Washington. "There is a deceleration of economic activity in the United States, which is stronger and faster than most had expected a month ago, and there is no region all over the world which (is) taking up the slack which means there is a slowing down of the global economy." Global recessions are particularly problematic because there is no locomotive to pull the other weak economies out of recession. Just last September the IMF forecast U.S. growth at 3.2 percent in 2001, but the global lending institution apparently misread the impact that Greenspan's boom-busting rate increases between 1999 and 2000 would have on the American economy. Now, the IMF is forecasting growth of just 1.5 percent, the slowest in a decade, and 2.5 percent in 2002. The U.S. gross domestic product's annual growth has spiraled from an impressive 8.3 percent to only 1.1 percent from the last quarter of 1999 to the final quarter of 2000. The hope is that the Fed's four interest-rate cuts since the beginning of the year will mitigate the economy's downturn, which could mean a shallower recession. Indeed, that may already be happening -- if the early estimate of growth in the first quarter of 2 percent holds up. The National Bureau of Economic Research, the official arbiter of U.S. recessions, said in early April that there is no recession. But the research firm has been off by a country mile in dating recessions before. During the last recession, it announced in April 1991 that a recession had begun in July 1990 and finally disclosed in December 1992 that it had ended in March 1991. Laksman's Economic Cycle Research Institute has a good track record in spotting changes in the economy. Its Weekly Leading Index, which dates back to the late 1980s, gives a snapshot of what's currently happening in the economies, instead of reporting what took place 30 or more days before. The ECRI was dead on when it forecast a U.S. recession in 1990 and the call was done in real time. The current massive cuts in the American jobs market, which are making headlines almost daily, will further shake consumers' confidence in the economy, the firm says. Indeed, the pessimism is so thick that you could cut it with a knife. Consumer confidence tumbled in April as U.S. households turned more gloomy about current and future business conditions. RECESSION CLIMATE SPREADING The Economic Cycle Research Institute says recessions now appear to be unavoidable in the United States, Japan, Korea and Taiwan, which together represent half of the world's gross domestic product. "What's troubling about this thing is that there are no obvious areas of stronger or rising demand in other parts of the world that could help offset the weakness being felt everywhere else," says Achuthan. In the 1990-91 recession, the world experienced an "English-speaking" recession -- the United States, Britain, Australia and Canada went through slow times while non-English speaking countries -- in Asia and continental Europe -- continued to grow, thus creating demand that offset the weakness in other countries. "Therefore, that recession was not as bad as it would have been, had all economies been falling," Achuthan says. The ECRI estimates that recessions are also likely to hit Mexico and Australia while serious slowdowns are expected in Canada, Germany, Spain and Switzerland. Growth will moderate in Britain, France, Italy and Sweden, it says. Only two economies are currently bucking the trend, New Zealand and India. The institute uses its Weekly Leading Index to spot turning points in business cycles. Last fall, the gauge signaled the United States economy moved lower and then it recovered in January 2001 when the Fed started lowering interest rates. But the WLI has since been on a steady downhill slide. The index can flag down a recession three months before the more famous Leading Economic Indicators because it is frequently updated with new information, the institute says. The stuff that goes into the WLI includes a nation's money supply and stocks and bond mutual funds, which provide a reading about how rich people feel, i.e. the wealth effect. It also tracks The Journal of Commerce-Economic Cycle Research Institute Materials Price Index, a commodity index that is sensitive to the industrial business cycle. The index measures the spread between U.S. Treasury and corporate bonds, which reflects shifts in Wall Street's sentiments. Mortgage applications and weekly jobless claims also go into the mix. The clinical definition of a recession is two straight quarters of declines in growth. On average, recessions last 10-1/2 months. The worst one lingered for 16 months between 1974-75 because it was a contagion that bled all of the world's economies. RECESSIONS TOUGH TO SPOT Recessions can be tough to figure out. Often, experts can't know how deep an economy was in recession until it was in the middle of one. In other words, they can only be identified with hindsight and the end of a recession can only be measured by the last quarter's growth rate. A worsening unemployment rate is a good clue that a recession is brewing. In the U.S. case, the jobless rate has increased from a low of 3.9 percent and now stands at 4.3 percent. During the 1990-91 recession the jobless rate was close to 7 percent. Indeed, Wall Street has its work cut out. First it has to figure out if the economy is in the jaws of a recession. Next, when will the economy grow back to its potential of 3.5 to 4 percent growth and when will corporate earnings pick up again. Historically, the stock market leads the economy by six to nine months.>>