To: NOW who wrote (99172 ) 5/3/2001 12:18:16 AM From: John Madarasz Respond to Labor Pains...May 2001 Increasingly the economic downturn seems like anything except a pregnant pause. Fed governors have run around the nation in the last month or so proclaiming the validity of the impending second half recovery. Greenspan continues to characterize the current experience as an inventory correction. Investors have made a so far feeble attempt at trying to believe that with the latest GDP number. Street strategists far and wide, who missed the entire last 12 month equity market downturn mind you, have "visibility" that we're just in a short few quarter inventory adjustment. A buying opportunity for the strong companies. As you know, at ContraryInvestor we try to keep it factual and simple. Hence, simple question. If this is a two quarter inventory correction, then why are corporate management's delivering the following message of their own? The current announced layoff experience of the last three months has no precedent in US history. It is now showing up in real unemployment claims numbers. We've been convinced that the lag this go around has been due to the Warn Act (requires 60 days notice to laid off employees) that was not in effect during the last recession. The Fed may believe it's a two quarter inventory adjustment. The Street may believe it's a two quarter inventory correction. Unfortunately, corporate managements are signaling that this is anything but a two quarter inventory adjustment. After all, it makes absolutely no sense at all to dismiss the numbers of employees being handed walking papers today, given the significant costs in finding and training employees over the last few years, if second half 2001 economic recovery was to be realized. contraryinvestor.com
