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To: AllansAlias who wrote (22120)	11/22/2001 10:36:10 AM
From: JRI	Respond to of 209892

Man, you comin' out swingin' today...you must have slept GOOD..g (I wouldn't know what that's like these days, g, ng) Funny, how when one can get away from wiggle-watching for a while...the ridiculous-ness of it all is like a cold shower (in your woods, a cold, cold, cold shower)

To: AllansAlias who wrote (22120)	11/22/2001 10:52:01 AM
From: skinowski	Read Replies (1) \| Respond to of 209892

Allan, I think your remarks are very correct here… Re: record bullish allocation - this should be read as very bearish indeed. “Professionals”, I remember reading, tend to turn bearish close to a major bottom, in 5th waves. I thought we started seeing some of that during the recent lows, which may have fit a bottom of the first ‘five’ down… I think it would be most unlikely that the entire Bear would turn out to be over.

To: AllansAlias who wrote (22120)	11/22/2001 12:45:56 PM
From: John Madarasz	Read Replies (2) \| Respond to of 209892

Interesting commentary below from a guy I usually feel is pretty on target. They must be part of that 76%<gg> This time I don't buy it, and i think they're missing badly. This is the second "Death of the Bear" here...i remember airplaning the ridiculous rag Kiplingers into the trash bin last May as thier cover proclaimed "THE BEAR IS DEAD" in bold headlines. Sadly it was a gift subscription, and I've yet to do much more than quickly leaf through the copious, and obvious, industry pump and dump sell side pages of the mag<ng> very poor periodical imo. northerntrust.com U.S. Economic and Interest Rate Outlook Monetary Conditions Point To Upside "Risks" November, 2001 We are in a recession, folks. When the economy is in a recession, almost everything looks terrible. The unemployment rate rises, personal income growth slows, consumer-spending growth slows, personal default rates rise, industrial production falls, capacity utilization falls, business capital spending growth slows, and corporate default rates rise. The Fed cuts the funds rate and yet the economy still shows no sign of recovery. Each time the recession is different. Each time, we hear that monetary policy is impotent. (We also hear that each time before we enter the recession and the Fed is raising the funds rate.) Somehow, though, the economy seems to recover from the recession. And we are growing more confident that the economic recovery from the current recession will be upon on sooner (the first quarter of 2002) rather than later, and that the risks are that the recovery will be stronger than expected. Why are we becoming more confident of this? Monetary conditions. Our proprietary Northern Trust Monetary Conditions Index (NTRSMCI) is flashing the "V" sign for V-shaped recovery, as shown in Chart 1. In addition to the NTRSMCI in Chart 1, we also have plotted the year-over-year percent change in real final sales to domestic purchasers. The NTRSMCI does a good job of foreshadowing the growth in real final sales to domestic purchasers. But not a perfect job. It did not predict the magnitude of the 1990 contraction in real final sales to domestic purchasers nor has it predicted the magnitude of the current downturn. But if it has missed the magnitude of the current downturn (let's wait for a couple of years of data revisions before we get too critical), the NTRSMCI did predict the downturn when the consensus was saying that monetary policy had lost its punch in this "new economy." Chart 1 In addition to the NTRSMCI, there are a couple of other reasons why we are growing more confident in a sooner-than-expected and stronger-than-expected recovery. One of these is fiscal policy. We have every confidence that Congress will pass in the next several weeks and the president will sign into law a fiscal stimulus package totaling somewhere in the neighborhood of $80 to $100 billion. This is on top of the next installment of the tax-rate cut enacted earlier in the year, the $40 billion of emergency spending authorized by Congress in the wake of September 11 events, and an increase in non-emergency discretionary spending. All told, we are looking at an extra $150 billion to $200 billion (representing 1-1/2% to 2% of nominal GDP) of fiscal stimulus in the fiscal year that commenced on October 1. The Keynesians, the supply-siders, and the Austrians are all saying that this fiscal stimulus is a misnomer in that there is not much stimulus. We disagree. We believe that some entity's spending will increase close to the amount of the combined tax cuts and federal spending. Although we sympathize with the supply-siders and Austrians that the fiscal plans may end up doing little to boost the potential growth rate of the economy, we believe that aggregate demand in the here-and-now will be bolstered, especially because the Fed stands ready to monetize fiscal impulse. Another reason we are growing more confident is that the inventory correction already is far advanced. Chart 2 shows that at -1.77%, the year-over-year percent decline in business inventories in the third quarter of this year is equal to or greater than what occurred in five of the past six recessions. When all of the monetary and fiscal stimulus that is being pumped into the economy starts to take hold, which, again is likely to happen sooner rather than later, producers' and sellers' shelves will be bare. This implies that a sharp reaction in production will result from an uptick in new orders Chart 2 Lastly, we are encouraged by the record 21.3 million unit annualized sales pace for cars and trucks in October, as shown in Chart 3. Yes, we know that motor vehicle producers' margins were slim or negative on many of these sales because of the zero-interest financing incentive. But we also know that households bought a record number of cars and trucks in a month in which the unemployment rate jumped by 0.5 points and the fear of anthrax contagion was running rampant. So don't tell us that lower interest rates won't pump up aggregate demand. Even if you are financing a car at a zero rate of interest, you still are making a commitment to pay out thousands of dollars over period of three years to five years -- at least GMAC and Ford Motor Credit assume you are making such a commitment. This would indicate that the actions of households speak louder than the words they tell the consumer confidence survey takers. For all of our bravado, we don't yet have the courage to forecast a big number for the percent change in 2002:Q1 real GDP. But we do have the courage to put a plus sign in front of it. We are saving the bigger positive numbers for the second and third quarters of next year. But, again, we think that surprises will be on the upside, not the downside. Paul L. Kasriel Head of Economist Research Asha Bangalore Economist