From Scott.........
Tim: Tell the Porchers that I've had a great break and I appreciate their support...This has been a busy time for me and 'the vacation from SI' came at an ideal time...I should be returning within the next 24 hours if Big Brother in charge of SI cooperates....=)
Please post the article attached below to RR out on the Porch....
Thanks & I hope you enjoyed the weekend.
-Scott
______________________________________________________________________
Bad News Makes A Good Market
Sunday November 4, 6:00 pm Eastern Time
Forbes.com
By Tara Murphy
<<Wall Street's in denial, big time.
It used to be that zero earnings visibility meant slumping stocks. Not anymore. While fears of terrorism are becoming more acute and non-farm payrolls are hitting a two-decade low, the stock market is heading higher, with the Dow Jones Industrial Average and Nasdaq Composite taking on 0.5% and 2.7%, respectively, last week. Depending on the scope of the government's economic stimulus and the Federal Reserve Board's decision on interest rates at Nov. 5's Federal Open-Market Committee meeting, stock buying may continue.
"A whole lot is riding on the stimulus," says Brian Gilmartin, portfolio manger at Trinity Asset Management. He says it includes tax cuts that would encourage institutions and individuals to invest.
Gilmartin says a half a percentage point cut in the short-term fed funds rate is practically in the bag after October's ugly employment data. The Labor Department reported that non-farm payrolls plunged by 415,000 jobs, far greater than economists' estimate of 289,000 and the revised September figure of 213,000. Meanwhile, the unemployment rate last month hit 5.4%. Some Wall Street economists see it falling more than 6%.
"I think that structurally the Fed knows that our economy has been damaged," says Gilmartin, citing the holes in consumption and investment, which are two major components of the gross domestic product.
For the third quarter, GDP component consumption rose only 1.2%, compared with the second-quarter's 2.5% increase. Meanwhile, fixed non-residential investment fell 11.9%.
Along with the Fed, the National Association of Purchasing Management reports the non-manufacturing index on Tuesday, and import/export prices will be released Nov. 8. On Friday, the Producer Price Index hits the market, but since nflation is relatively contained, it won't make too much noise.
Meanwhile, investors will hear quarterly reports from Cisco , Qualcom and Clear Channel Communications .
With the Nasdaq's resilience, Gilmartin says, tech stocks such as Nokia and Texas Instruments are starting to outperform, climbing 39% and 11%, respectively, since Sept. 17, when the market reopened. And if history repeats itself, the semiconductor sector's downturn, which began in September 2000, came full circle in September 2001, as it did in 1995 to 1996 and in 1997 to 1998, he says.
On Friday, the Dow finished up 59.64 to 9,323.54, while the Nasdaq closed down, -0.57 to 1,745.73.
Jim Volk, co-director of institutional trading at D.A. Davidson, says military developments in the Middle East still factor into the markets' direction. "It may not be better in three to six months, but we're getting ready to buy stocks," he says. He expects the economic stimulus and lower interest rates to strengthen consumer and corporate confidence.
Investors are always willing to give the market another chance.>> |
