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Strategies & Market Trends : Sharck Soup -- Ignore unavailable to you. Want to Upgrade?

To: besttrader who wrote (25628)	5/31/2001 1:24:18 PM
From: StormRider	Read Replies (1) \| Respond to of 37746

The Economy : The initial 2.0% print on the Q1 GDP report and the subsequent Fed easing on May 15 marked the high water mark for economic optimism. Only now is that optimism being questioned, despite the fact that the economic news has been deteriorating throughout this period. Indeed, the risk of recession has been rising steadily, not falling, as gold and Treasury market sycophants would have you believe. Check out the evidence: Employment conditions have weakened as measured by nonfarm payrolls, jobless claims, purchasing managers' employment indexes, and the help wanted index. Capital spending trends have worsened, as measured by both the durable goods report and individual company spending plans. Manufacturing sector remains very weak: industrial production has now fallen for 7 straight months and purchasing managers' indexes remain near cycle lows. Service sector also showing signs of deterioration: NAPM services index fell to a new all-time low of 47.1% in April. The housing sector has finally shown some cracks, with existing and new home sales off sharply in April. Granted, these numbers are all about the past, but there is no reason to expect a quick reversal. The capital spending recession in particular appears likely to last for several more quarters as businesses work off the excess of the past few years. And Fed easing, while certainly helpful, has not been as potent as it could be since the rate cuts are not being fully reflected in market interest rates -- both corporate and mortgage rates have seen little movement. We have been cautioning that the June warnings season poses substantial market risk as the weak economic environment most likely cannot support sell-side analysts' expectations for a quick earnings recovery. Already, there have been hints of these problems, and we haven't even hit June yet... - Greg Jones, Briefing.com