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

To: Lizzie Tudor who wrote (16192)	2/8/2003 2:46:11 PM
From: High-Tech East	Respond to of 19219

Over the last several years, I have become more and more impressed by the "Financial Times" in general, and more specifically, the veracity of their editorials. I am always puzzled how the leading British business daily sees America so much more accurately than we see ourselves. "Wall Street Journal" editorials generally see America in the same way as the British viewed America in the late 1700's - with an aristocratical attitude of pure royal blue. That prevailing attitude within the Dow Jones Company does not help American businessmen see America and Americans as we really are ... not a good situation for America. Here is today's lead editorial from the "Financial Times" ... dead on target as usual .......... Ken Wilson _______________________________________________ Comment & analysis / Editorial comment Investors in eager anticipation of war Published: February 8 2003 4:00 To date this year, investors have had to contend with two big issues: the ever louder drumbeat of war; and further sharp falls in equity markets. Naturally, a causal link is often drawn, so investors eagerly look forward to the near future when the uncertainty of war has passed and markets can rise. The logic, at its most crass, is that financial markets need war to avert the unsettling effects of the threat of war. Though prone to parody, this view does not lack supporting evidence. An armed conflict with Iraq could be won relatively quickly just as it was in 1991. In the last Gulf war, world equity markets fell 16 per cent between August 1990 and mid-January 1991, the period between Saddam Hussein's invasion of Kuwait and the start of hostilities. Once Iraq accepted ceasefire terms in March 1991, world equity markets had regained all of those losses. The oil price more than doubled from $16 a barrel in July 1990 to $40 that October before gradually falling back to pre-war levels as the conflict was resolved. And the US economy, which had been in recession since July 1990, hit a trough in March 1991 and subsequently started the longest expansion in US economic history. Cautious investors, however, should be more circumspect. First, wars are unpredictable, so only the foolhardy would count on another easy victory. And even if such an outcome is achieved, the economic consequences also depend on unknown ramifications elsewhere in the Middle East. Second, because the broad consensus in financial markets is that any war will be relatively quick and painless, it would be wrong to assume a similar bounce to 1990-91 once victory occurs. Traders, understanding the historical precedents, will have priced-in the likelihood of a quick victory already. It is most improbable, therefore, that a second Gulf war will have the same effects on markets as the first. Third, the economic outlook is different from the early 1990s. Investors should imagine how optimistic they would feel if the Gulf were peaceful. Some weakness is certainly Iraq-related but the poor performance of corporate profitability has other roots; consumers in the US and the UK have record levels of debt and could not easily borrow much more in any event; and the structural weaknesses of the German and Japanese economies cannot be blamed on the Middle East. This leaves investors facing two alternative outcomes: things will either get rapidly better or dramatically worse. According to the first scenario, something of a repetition of the early 1990s rebound occurs; business confidence is restored; companies start to borrow and invest heavily again; consumer confidence in Europe and Japan rebounds; this helps to boost exports from the US, the UK and other countries with large trade deficits; and Anglo-Saxon consumers do not begin to fear the record debt levels they have accumulated when nominal interest rates were low. The second outcome is feared and rarely discussed: businesses, consumers, investors and governments discover that recent economic weakness was not caused by the uncertainties of imminent war but by the remaining overhang of the excesses of the late 1990s. Disappointment would be widespread and another global recession would be extremely difficult to avoid. Neither outcome can be predicted with any certainty, but neither can be discounted. Only the naive investor should expect much certainty to return to financial markets once the bombs start to drop. news.ft.com.

To: Lizzie Tudor who wrote (16192)	2/8/2003 4:16:08 PM
From: Steve Lee	Read Replies (2) \| Respond to of 19219

No, the volume is consistent with the public buying while the smart money is distributing to them.