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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (79554)	6/16/2002 12:52:28 AM
From: Bandit19	Respond to of 99280

Mike, This is from John Murphy Friday June 14, 2002 - MORE WEAK NUMBERS - CONSUMER SENTIMENT WORSENS... The latest Michigan Sentiment numbers fell to 90.8 from May's 96.9. This follows on the heels of yesterday's sharp drop in retail spending -- and another decline in Producer Prices. It's disconcerting to keep reading about "surprisingly" weak economic numbers. Exactly who is being surprised? A well-known economist was quoted in IBD this morning saying: "My belief is that the recent market weakness is not an economic signal that the recovery is at risk." We've pointed out before that the market leads the economy -- not the other way around. The collapse in stock prices over the past couple of months has been warning of a slowing economy. Maybe it's time the media starts interviewing people who aren't so "surprised" all the time. The intermarket picture today continues to reflect a weakening picture. Economic weakness is pushing bond prices up (and yields down), stock prices down, the dollar down, and gold up. That's been going on throughout the entire second quarter. Global stock markets have also been rolling over. Asia fell 2% today, while Europe lost 3%. Yesterday, we showed the Dow and the yield on the 10-year T-note threatening their February lows. Those lows have been broken in both markets. The Dow and the T-note yield are now trading at the lowest levels since last fall. What does surprise us is that economists and the media keep referring to the drop in the PPI as "good" news. Historically, a drop in prices (spelled deflation) is bearish for stocks -- not bullish. CONSUMER STOCKS DROPPING... Consumer-oriented stocks -- like retailers -- are getting hit pretty hard today. The Morgan Stanley Consumer Index has broken its 200-day moving average. Consumer spending accounts for two-thirds of the American economy. If the chart below reflects loss of consumer confidence (and we think it does), that can't be good for the economy.