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To: Jim Willie CB who wrote (4138)	4/16/2003 9:59:44 AM
From: 4figureau	Read Replies (1) \| Respond to of 5423

Bear Roundup: Auto slump will last years - Forbes (4/16/2003 7:30 AM) forbes.com Central bank pulls trigger, raises key rate again - Globe&Mail (4/16/2003 6:54 AM) globeandmail.com HK travel firms 'face collapse' - BBC (4/16/2003 6:48 AM) news.bbc.co.uk

To: Jim Willie CB who wrote (4138)	4/17/2003 9:22:23 AM
From: 4figureau	Read Replies (1) \| Respond to of 5423

Nation's Jobless Claims Shoot Up By JEANNINE AVERSA The Associated Press Thursday, April 17, 2003; 8:39 AM WASHINGTON - New claims for unemployment insurance shot up last week to their second-highest level of this year, a fresh sign of the difficulties facing workers as companies, trying to cope with a listless economy, seek leaner work forces. The Labor Department reported Thursday that new applications for jobless benefits rose by a seasonally adjusted 30,000 to 442,000 for the work week ending April 12. That increase pushed claims to their highest point since March 29, when claims hit 443,000, the highest level of the year. For nine straight weeks, claims have been above the 400,000 mark, a level associated with a stagnant job market. Thursday's figures were weaker than economists were expecting. Some of the rise in claims last week was attributed to layoffs in the automobile industry, a Labor Department analyst said. Businesses have been struggling with lackluster profits and uneven demand from customers. Against that backdrop, companies have been reluctant to increase capital spending and go on a hiring spree, major forces restraining the recovery. The more stable, four-week moving average of initial jobless claims also rose last week by 3,500 to 424,750, the highest level in nearly a year. Economists believe the nation's unemployment rate - now at 5.8 percent - is likely to rise in the months ahead. Federal Reserve Chairman Alan Greenspan and his colleagues are hopeful that once the war in Iraq is over, the economy will return to good health. But even if the economy starts improving a bit later this year, the jobless rate probably will creep up because job growth won't be strong enough to accommodate the expectation that an improved climate will attract a lot more job seekers. The number of unemployed people continuing to draw jobless benefits went up by 76,000 to 3.57 million for the week ending April 5, the most recent period for which this information is available. That marked the highest level in continuing jobless claims since Nov. 9, 2002. Economists don't expect companies to step up hiring or capital investment until they feel secure about the economy, their profits and customer demand. After sliding into recession in 2001, the economy has been struggling to get back on firm footing. The economy's growth, however, has been characterized by a jagged pattern, where a quarter of strength is followed by a quarter of weakness. That climate - along with uncertainties surrounding the war with Iraq - gave already cautious businesses another reason to clamp down on spending and investment. The Federal Reserve decided in March to hold the federal funds rate at 1.25 percent, a 41-year low, with the hope that will spur more spending and investment and help along the economy. The funds rate is the Fed's main lever to influence economic activity. President Bush, recognizing congressional skepticism over the size of his original proposal for a $726 billion tax cut, is now calling for $550 billion worth of reductions over 10 years. washingtonpost.com

To: Jim Willie CB who wrote (4138)	4/17/2003 9:25:39 AM
From: 4figureau	Respond to of 5423

Out of buyers. . . Richard Russell Dow Theory Letters April 17, 2003 Housing- - The plot is easy to read. The Fed has read it all along. The plot is as follows -- American consumer MUST AT ALL COSTS CONTINUE TO CONSUME. What keeps America's consumers spending? The phenomenon that keeps them spending is the rise in home prices, along with the money they pull out of their home equity through refinancing. It all boils down to this. The Fed must keep interest rates low and lower so that consumers continue to buy homes and so that home prices continue to rise and so that consumers can continue to pull equity out of their rising home prices. Thus, the US economy now depends on the trillion dollar housing industry. If housing tops out, if home prices head down, the US economy will be in major trouble. The Fed is well aware of this, and the Fed will do anything it has to -- to keep people buying homes and to keep home prices rising. But here comes trouble. In March housing starts surged 8.3% to a record annual rate of 1.78 home starts. Home starts are terrific. But home sales are starting to decline. God help us, the US may be running out of buyers! For this reason, it would not surprise me at all if the Fed dropped rates another half percent. The Fed is desperate to keep the housing boom going, After all, it's he only "boom" we've got (except, of course, for the boom in debts and deficits). So the eyes of the Fed are on housing. Greenspan is back telling the world that there is no "housing bubble." But as we all know, Greenspan couldn't spot a bubble if he was sitting on one. Furthermore, it's been said that you can't identify a bubble if you're inside one. But believe me, housing is in a bubble. One proof of the bubble is the ratio of home prices to rent costs. Currently, the ratio is near its highest level in history, meaning that it's much cheaper to rent than to buy a house. I've been talking about that in different terms for decades. The example I use takes us back to the early 1940s. Those were dark days during the Depression. In the early 1940s brownstone homes (two to five story houses) in New York City were so cheap that you could buy a brownstone for $30,000 with $10,000 down. The brownstone would be half occupied and you could still make 25% on your money. My father, who was a real estate man all his life, used to call that "out in four years." In other words, you could buy the brownstone for $10,000 and get your money back in four years. And that was with the building half rented! Those were the days when housing was a great bargain. The only trouble was that people were afraid to buy. Today those same brownstones sell in the millions of dollars. What I've just described, the situation in 1940, is the direct opposite of the situation today. In those days people were frightened, money was scarce, and if you did have money you kept it in the safest place possible, most likely in the bank or in government paper. So as I see it, the current housing situation is highly dangerous. Home prices are too high, they're financed with too little equity, and the nation, I believe, is beginning to run out of buyers. 321gold.com