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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: kdavy who wrote (54711)	10/27/2001 1:59:32 AM
From: StanX Long	Respond to of 70976

Fed bank president uses the 'R' word - recession 10/26/01 4:10 PM Source: Reuters By Jonathan Nicholson WASHINGTON, Oct 26 (Reuters) - With the the housing sector weakening and consumer spending slowing, a Federal Reserve regional bank president on Friday used the dreaded word public policymakers have been so far reluctant to utter -- "recession." "I suspect (third-quarter growth) will be slightly below zero and I wouldn't be surprised if the fourth quarter isn't a little bit under zero as well," said Robert McTeer, in a speech to the Downtown Rotary Club of Fort Worth, Texas. "I think it will eventually be designated a recession," he said. While Fed chairman Alan Greenspan and Anthony Santomero, president of the Federal Reserve Bank of Philadelphia, also spoke on Friday, they did not touch on the monetary or economic outlook. A recession is usually designated as at least two quarters of shrinkage in economic output. While the second quarter posted an annual growth rate of 0.3 percent, most analysts expect the third quarter to show a decline in output - the first negative quarterly reading since 1993. Many analysts also see the fourth quarter as showing a decline as well. WARINESS OF RECESSION But members of Washington's economic policy establishment have been wary of using the word, even when they've agreed it may be technically correct to do so. Senior White House economic advisor Lawrence Lindsey on Oct. 16 predicted "we are going to have two quarters of negative growth." But Lindsey, himself a former Fed governor during the mid-90s, declined to repeat that prediction in subsequent interviews. In his appearance before a Capitol Hill panel on Oct. 17, Federal Reserve Chairman Alan Greenspan gave only a muted warning about prospects ahead, staying far away from the "R" word. "These circumstances pose a difficult challenge for business decision making, not so much because the costs are inordinately large, but because the events, which have potentially substantial consequences, are so uncertain," Greenspan said. That cautionary tone was echoed in the Fed's "beige book" issued on Wednesday. The report, an anecdotal survey of economic conditions around the country from September through Oct. 15, noted a short period of "sharply reduced" activity after the Sept. 11 attacks on New York and Washington but noted "longer-run effects are more difficult to assess." "OK TO SAY IT" Paul Kasriel, director of economic research with The Northern Trust Co. in Chicago, said officials are merely shying away from stating what may be obvious. "It's OK to say it," he said. "I don't think it's a secret." "If you were to hook them all up to a lie detector, I think you'd find most of them think we're in a recession," Kasriel said. Recent economic data have shown a slowdown in September in the two areas of the economy that had shown some strength - consumer spending and housing. September retail sales fell 2.4 percent. On Thursday, the National Association of Realtors said existing home sales slid 11.7 percent in the month. That was reinforced on Friday, when the Commerce Department said sales of new homes fell 1.4 percent in September. Despite the grim tone of recent data, the Dallas Fed's McTeer said the Fed has put the monetary "pedal to the metal," in easing nine times over the course of the year. "We are front-loading monetary policy to get out of this thing fast. We are not going to do it in dribs and drabs," he said. Copyright 2001, Reuters News Service

To: kdavy who wrote (54711)	10/27/2001 11:43:03 AM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

ST trading: Interesting plan. My guess is, we need to spend a couple of months at least, in a bottoming range. If 40 is the top of that range, a stock as volatile as AMAT would have a bottom (of the temporary range) lower than 35. Maybe 30. The other possibility is that we punch through 40, and re-establish the 40-50 range. I'd give that lower odds. The options that will make the most money, to play that range, are at-the-money ST options bought when we are at the bottom of the range. Too risky for me, doing this right means guessing right on too many variables (variables that I am uncertain about, although I guess constantly). The above seems to be what you're doing with SUNW (buying at-the-money ST options), but with AMAT, you're using far-out-of-the-money longer-term options. Could you explain why the difference? Again, this is not a criticism, I'm just trying to understand your thought process.