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To: Les H who wrote (100071)	5/6/2001 10:45:21 AM
From: Giordano Bruno	Read Replies (1) \| Respond to of 436258

Bank of England Seen Lowering Interest Rate quote.bloomberg.com

To: Les H who wrote (100071)	5/6/2001 10:52:54 AM
From: Les H	Read Replies (1) \| Respond to of 436258

Newsletter writers nytimes.com

To: Les H who wrote (100071)	5/6/2001 11:01:19 AM
From: Les H	Read Replies (1) \| Respond to of 436258

200% vendor loans latimes.com

To: Les H who wrote (100071)	5/6/2001 3:13:57 PM
From: patron_anejo_por_favor	Respond to of 436258

Nice take by Gretchen Morgenson on the unemployment report: nytimes.com May 6, 2001 Market Watch: Stock Investors Manage to Ignore 223,000 Lost Jobs By GRETCHEN MORGENSON A giant tree fell in the forest on Friday, but to stock market investors, it didn't make a sound. The crash that only the bond market appeared to hear was the news that the United States economy lost more jobs in April than it had at any time during the last 10 years. According to the Labor Department, payrolls plummeted by 223,000 in the month, and the unemployment rate rose to 4.5 percent, its highest in two and a half years. Equally ominous was the rate of employment growth as measured by a survey of households; for the first time in a decade, it fell into negative territory. That rate typically goes negative only in a recession. What the jobs report signified to some economists was an imminent weakening in consumer spending. So far, that spending has held up remarkably well, giving the only bounce to an otherwise drooping economy. But to stock investors, the jobs report was a nonevent. They remain convinced that the economy will recover in the second half, in large part because Alan Greenspan, the Federal Reserve chairman, is slashing interest rates. The bulls argue that stocks are the place to be, because the market sees past the current slowdown and has a quick recovery in its sights. Rising unemployment, however, changes the quick- recovery script substantially. As long as they have jobs, consumers are willing to keep up profligate spending habits even if they have to borrow money to do so. Once they lose their jobs, however, consumers may well snap their wallets shut. "In the face of rising joblessness, consumer confidence gets hit," said Stephen S. Roach, chief economist at Morgan Stanley Dean Witter. "That will take personal consumption growth well below the 3 percent pace we've been cruising at during the last couple of quarters." Add this to the already weak spending by corporations and the negative impact that a strong dollar will have on exports, and Mr. Roach concludes that the relatively narrow economic downturn is about to become much broader. James W. Paulsen, chief investment officer at Wells Capital Management in Minneapolis, has a similar worry. He says that within three to four months, the nation's unemployment rate may be as high as 5.4 percent. "We're going into this slowdown with the highest fixed-cost structure ever at companies, because of the technology boom," he said. Those costs are the interest expenses and depreciation costs that followed corporations' big investments in technology. "If you can't cut your fixed-cost structure, you've got to cut your variable," he said. "That's why we've seen such alarming layoff announcements." Mr. Paulsen reckons that with such high fixed costs, corporations may continue to pare jobs even when the economy is growing slowly. "Because interest rates have been coming down, consumers have been able to pile on more debt," he said. "But if you start destroying jobs, we're going to find out there is a consumer debt problem. And that's one of the reasons we are going to have a hard time restarting the economy." Which brings us to Mr. Greenspan. While stock market investors revere him, others think his rate cuts may have a muted impact this time around. "We'll probably have a nice fiscal stimulus," Mr. Roach said. "But the Fed will not be able to get the classic traction with this policy easing. The real problem here is that America is working through the aftershocks of an equity bubble. And balance-sheet adjustments, both on the part of companies and consumers, must be made before the economy can respond as it classically does to a monetary ease."