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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: lightwave51 who wrote (40367)	8/18/2001 1:55:10 PM
From: stockman_scott	Respond to of 65232

Remember Irrational Exuberance? SmartMoney.com - Weekend Report Saturday August 18, 11:38 am Eastern Time By Igor Greenwald DEAR CHAIRMAN GREENSPAN: Tuesday sounds like a fine day to go golfing. Maybe take your hardworking wife on a nice daytrip. Or swap some statistical arcana with your polyglot pal Pablo. Just so long as you cancel that Federal Open Market Committee meeting widely expected to produce another interest rate cut. Fact is, Mr. Chairman, now that the Fed has cured everyone of the irrational exuberance encouraged by its previous easing campaign, it's in a no-win position with investors, just like all those stock indexes. Cut by a half-point, and the pundits will twist themselves into pretzels trying to find whatever horror spooked you. Cut by a quarter-point and those same pundits will insist it should have been a half. And don't you listen to those unnamed traders who were telling CNBC Friday that the most market-pleasing outcome would be no cut at all, because that would allegedly display the Fed's confidence. They must be short-sellers one and all. Doing nothing might be sound policy, but it would also be the surest way to drive the easily shocked markets to new lows. So make up an excuse. Phone in a bomb threat. Go fly a kite. But don't stand there like an impotent magician waving a wand before an audience that no longer thinks the rabbit will pop up in six months' time, or however long it's supposed to take these days for a rate cut to be of any use. Don't cut rates, but don't not cut them either. It's all bad news these days, so we don't need another ``data point'' to misinterpret. Sincerely, Concerned shareholders P.S. We're not the only ones who feel this way. ``Another rate cut, the seventh of its kind this year, is unlikely to boost business investment, which has fallen off sharply,'' says Fahnestock & Co. Senior Vice President Alan Ackerman, who does not see good things in the offing. ``The problem isn't Dell (NASDAQ:DELL - news) or Ciena (NASDAQ:CIEN - news) or EMC (NYSE:EMC - news), the problem is investors are shell-shocked. There's no conviction, no leadership and no incentive to put money to work.'' Ackerman's dog-days prescription? ``Keep cash, keep cool and keep cautious.'' The technical charts say the Nasdaq and the S&P 500 are in trouble. These, of course, are the same charts that as recently as a week ago were forecasting a rally. So everyone gets to write their own script: Either bargain hunters leave their bunkers Monday and bid the Nasdaq back to 1900 or foreigners decide that a weak dollar and a wobbly stock market don't add up to one good reason to keep their money parked on Wall Street, making everyone long for the good old days of range-bound trading. If the risks seem to outweigh the rewards, it's because that's how most experts see it. ``I don't think the Fed action this week is going to be very effective in stemming the market tide,'' says Ricky Harrington, technical analyst for Wachovia Securities. ``We get a run-up for a day or two before or after the announcement, but there seem to be too many influences on the downside in this market for it to make too much of a difference.'' Even Larry Rice, the Josephthal & Co. chief investment officer who believes the bears got a bit ahead of themselves on Friday, doesn't expect stocks to roar back. ``There's a trading bounce to be had here. That's somewhat good news,'' he says. ``The bad news is that valuations are still generally too high.'' Take Lowes (NYSE:LOW - news), the No. 2 home-improvement retailer behind Home Depot (NYSE:HD - news) which kicks off a light slate of earnings reports Monday morning. By all accounts a nice company with an impressive growth rate — and a trailing price-earnings ratio near its all-time high. Tuesday morning comes the turn of Target (NYSE:TGT - news), the big discount chain doomed to play second fiddle to Wal-Mart (NYSE:WMT - news). Nice company, nice growth rate — and a record high trailing p/e. Kmart (NYSE:KM - news) on Thursday? OK company, tepid growth rate and a forward p/e higher than Target's. Seems as if some of the mad money fleeing the tech wreck might have found a congenial home in retail. Though most of it apparently settled like a spare tire around the market cap of Krispy Kreme Doughnuts (NYSE:KKD - news), a kompany that also reports Thursday and that can neither spell nor ever justify a price-earnings ratio above 100. On the other hand, Krispy Kreme is ahead of Agilent Technologies (NYSE:A - news) and Sycamore Networks (NASDAQ:SCMR - news), which report losses Monday and Tuesday and so have no p/e ratios to speak of. Some of Sycamore's older switches have the shelf-life of day-old doughnuts. Its main virtue is that it's no Ciena, enticing no one to confuse its health with that of the market as a whole. Count your blessings.