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Strategies & Market Trends : MARKET INDEX TECHNICAL ANALYSIS - MITA -- Ignore unavailable to you. Want to Upgrade?

To: nsumir81 who wrote (11048)	3/5/2002 6:10:34 PM
From: nsumir81	Respond to of 19219

Here's a CBSMktwatch article today on the RECOVERY and March Madness cbs.marketwatch.com from below...."The umpire of the business cycle, the National Bureau of Economic Research, has said repeatedly that it does not look at the gross domestic product numbers in determining the onset and duration of a recession. The NBER has also said that a recession can occur without the GDP declining for two quarters; it's the media that perpetuates this myth. " IRWIN KELLNER March madness Commentary: Stock market's ahead of itself on recovery By Dr. Irwin Kellner, CBS MarketWatch.com Last Update: 9:36 AM ET March 5, 2002 NEW YORK (CBS.MW) -- Happy days are here again -- or are they? Good news has many parents while bad news is an orphan. Now that the stock market is back to its highest level since last July, commentators of all kinds are rushing to jump on the bandwagon and proclaim themselves born-again bulls. Talk about irrational exuberance! Rosy Scenario is alive and well, and marching on the Street of Dreams. On CBS.MarketWatch.com alone, you can find a number of paeans to the economy -- not to mention to the reviving stock market. One commentator is even going so far as to question whether we even had a recession in the first place! Whoa! Time to step back and take a deep breath. First of all, we did have a recession. If you don't believe me, ask the 1.4 million people who have lost their jobs over the past year, the companies whose profits fell by 50 percent or more -- the biggest drop in postwar history -- or the firms in the capital-goods sector for which a recession would be a step up from where they landed. The umpire of the business cycle, the National Bureau of Economic Research, has said repeatedly that it does not look at the gross domestic product numbers in determining the onset and duration of a recession. The NBER has also said that a recession can occur without the GDP declining for two quarters; it's the media that perpetuates this myth. Of course, this does not mean that we are still in a recession. As I have said on a number of occasions, the economy most likely began to recover around year's end. And while the stock market is perfectly rational in rising ahead of this recovery, I just think it's gotten ahead of itself. Take price-earnings ratios. At Monday's close, the Standard & Poor's 500 traded at 63 times its last 12 months' earnings. For those of you who care, that's almost five times its historical average. Whither pricing power? If you think that profits are going to rise enough this year to bring this ratio down to anywhere near its long-term average, think again. Most companies simply don't have the pricing power necessary to give earnings that kind of a lift. As for the strength of the recovery, keep in mind that there's little in the way of pent-up demand, since consumer spending never weakened the way it usually does in a recession. And there's so much excess capacity, it wouldn't be prudent to expect the business sector to provide much push by boosting capital spending. What about the other things that mattered just last month, such as investor confidence in Corporate America's financial statements? Have we already forgotten the Enron/Andersen debacle? On the interest rate front, bond rates have barely budged over the past year even as the Federal Reserve cut short-end rates 11 times. This means the cost of borrowing is still high for most. It also means that bonds remain attractive enough to pull money out of the stock market. Dr. Irwin Kellner is chief economist for CBS.MarketWatch.com and is the Weller professor of economics at Hofstra University.