Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Sully- who wrote (45825)	1/5/2002 6:51:37 PM
From: stockman_scott	Respond to of 65232

Market's Economic Optimism Carries Risk Saturday January 5, 4:58 pm Eastern Time By Kenneth Barry NEW YORK (Reuters) - Stocks have rallied over the past three months, raising hopes that the recession is over -- but Wall Street doesn't always get it right. The stock market can be a leading indicator of the economy. In many cases, it has foreshadowed what would happen months in advance. Now, some are saying that the market's recent upturn is telling us that the first recession in ten years is over. But investors would be wise not to believe all the hype and instead wait for stronger confirmation. Usually, one of the best indications of a rebound would be a clear sign that battered corporate earnings are turning around, analysts say. Recessions in the United States since World War II have averaged nine to eleven months. Since this one started in March, it could already be coming to an end. But not so fast, says Richard Sylla, a financial historian at New York University's Stern School of Business. There are reasons to believe that this recession may last longer than people think. ``Following the stock market bubble there was a major decline in stock prices, which did a lot of damage to people's wealth,'' said Sylla, who is Henry Kaufman Professor of the history of financial institutions and markets. FUTURE EARNINGS The recent upturn reflects a recovery from the long decline in stock prices. The Dow Jones Industrial average is up more than 20 percent, the Nasdaq up nearly 40 percent and the S & P 500 nearly 20 percent higher. But even with the rebound, the major stock indexes ended 2001 down for the year. The rally started only after stocks hit bottom on Sept. 21 in the aftermath of the attacks on the World Trade Center and the Pentagon. To sustain the stock market upturn into the new year, the economy will need to carry through on its recovery. Even if it does, the years of stocks returning 20 percent on average, as happened in the late 1990s, are almost certainly over. The near-global upturn that helped back then isn't a factor anymore. Don't look for Europe and Japan to help the United States to get out of recession. They, too, are weak. To spur growth here, Federal Reserve Chairman Alan Greenspan slashed rates 11 times last year, bringing them down to 40-year lows in the U.S. central bank's most aggressive campaign on record to slow a downturn. Greenspan has built a record over the years of recognizing problems and responding with the right medicine. When weakness in the banking system contributed to the 1990-91 recession, Greenspan engineered lower rates to get growth back on track. But some experts wonder how much more he can do this time to rescue the economy. A potential lifeline for the economy was snatched back in late December when Congress failed to pass a stimulus package containing tax cuts and more government spending. President Bush and his fellow Republicans in Congress favored tax breaks for businesses and individuals and extending aid for the growing ranks of the unemployed. But the Democrats, who control the Senate, said the plan was larded with benefits for corporations and tax breaks for the rich. With the economy's crystal ball so clouded, investors may be wise to be cautious -- and wait for stronger corporate profits that almost inevitably spell gains in stocks. REASONS TO BE CAUTIOUS Corporate earnings were falling even before the hijacked plane attacks and outbreak of war battered consumer spending and worsened many corporations' financial position. Major high-tech and telecommunications companies were reeling from overproduction and unwise investments during the stock market bubble. Drug giants like Merck and Bristol-Myers recently have warned their earnings will stay flat or drop. That means that even as the market fell hard, corporate profits fell in tandem, keeping stocks expensive in relation to underlying earnings. ``Stocks are more richly priced now because earnings have fallen so much,'' Sylla said. Still more air needs to be let out of stock prices so they can come in line with earnings, say some analysts. On average, analysts expect profits of S&P 500 companies to fall 16 percent for the first quarter of 2002. As a result, Sylla says, this is not the time to take all your money out of money market investments to chase the rally in stocks. He recommends putting no more than 50 percent in stocks and the rest in bonds and money markets. ``Then you are cushioned whatever happens,'' he says. Things look good for later in the year. Recent data showing the rate of decline in the hard-hit manufacturing sector slowing down is a very good sign for the economy, says Alan Levenson, chief economist at T. Rowe Price. By late this year he sees gross domestic product, or GDP, rising at a 4 percent annual rate. ``The earnings outlook for the second half of the year from a GDP perspective should improve,'' says Levenson. For the week, the Dow Jones industrial average rose 123 points to 10,260, the Nasdaq Composite gained 72 points to 2,059 and the S&P 500 was 12 points higher at 1,173.

To: Sully- who wrote (45825)	1/8/2002 12:53:18 AM
From: stockman_scott	Respond to of 65232

Clinton's bin Laden gaff From the Sunday Times 07 jan 02 US president Bill Clinton turned down at least three offers involving foreign governments to help seize Osama bin Laden after he was identified as a terrorist who was threatening the US, according to sources in Washington and the Middle East. Mr Clinton himself, according to a Washington source, has described the refusal to accept the first offer as "the biggest mistake" of his presidency. When Sudanese officials claimed late last year that Washington had spurned bin Laden's secret extradition from Khartoum in 1996, former White House officials said they had no recollection of the offer. Senior sources in the former administration now confirm that it was true. Far from an isolated incident, this was the first in a series of missed opportunities. One of these involved a Gulf state; another would have relied on the assistance of Saudi Arabia. In early 1996, America was putting strong pressure on Sudan's Islamic government to expel bin Laden, who had been living in the country since 1991. Sources now reveal that Khartoum sent a former intelligence officer with CIA connections to Washington with an offer to hand over bin Laden – just as it had put another terrorist, Carlos the Jackal, into French hands in 1994. At the time, the State Department was describing bin Laden as "the greatest single financier of terrorist projects in the world" and was accusing Sudan of harbouring terrorists. The extradition offer was turned down, however. A former senior White House source said: "There simply was not the evidence to prosecute Osama bin Laden. He could not be indicted, so it would serve no purpose for him to have been brought into US custody." A former figure in American counter-terrorist intelligence claims, however, that there was "clear and convincing" proof of bin Laden's conspiracy against the US. In May 1996, US diplomats were informed in a Sudanese government fax that bin Laden was about to be expelled – giving Washington another chance to seize him. The decision not to do so went to the very top of the White House, according to former administration sources. Barely a month later, on June 25, a 2300kg truck bomb ripped apart the front of Khobar Towers, a US military housing complex in Dhahran, Saudi Arabia. The explosion killed 19 US servicemen. Bin Laden was immediately suspected. A second offer to get bin Laden came unofficially from Mansoor Ijaz, a Pakistani-American millionaire who was a donor to Mr Clinton's election campaign in 1996. On July 6, 2000, he visited John Podesta, then the president's chief of staff, to say that intelligence officers from a Gulf state were offering to help to extract bin Laden. Details of the meeting are confirmed in an exchange of emails between the White House and Mr Ijaz. The deal fell through when, according to Mr Ijaz, the US sent a senior counter-terrorism expert to the United Arab Emirates to check the authenticity of the offer. Mr Ijaz said the arrangement was to have been made through unofficial channels, and the US's "front-door" approach had rendered that impossible. A third, more mysterious, offer to help came from the intelligence services of Saudi Arabia, then led by Prince Turki al-Faisal, according to Washington sources. Details of the offer are still unclear although, by one account, Prince Turki offered to help to place a tracking device in the luggage of bin Laden's mother, who was seeking to make a trip to Afghanistan to see her son. The CIA did not take up the offer. sundaytimes.news.com.au