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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Sam who wrote (3097)	5/16/2001 9:26:15 AM
From: Robert Douglas	Read Replies (3) \| Respond to of 3536

Meanwhile, capital spending declines when money is in short supply and the economy contracts. Sectors that depend on capital spending — in particular, information technology, business services and industrial equipment — have a tough time. Now that the bond market is becoming more worried about a strengthening economy, and the Fed is liquefying quickly — to the point where its cycle of rate cutting might be approaching an end — stock investors should start re-examining their sector strategy. I'm all for the predictive nature of the markets and "looking over the valley," but I think it's a bit premature to start buying equities connected to the capital spending cycle. We just had a report out this week saying that the capacity utilization of American business was at its lowest in ten years. Combine that with corporate profits that are downright dismal and you don't have a very positive environment for capital spending. It seems like everyone is so anxious to get back to a bull market that they are calling for an end to the recession before it has even begun. I think that the bond market is taking its cues from the stock market and predicting a recovery. I think that as the year progresses and the economy stays weak, there will be disappointment.