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

To: J.T. who wrote (17583)	7/25/2003 3:05:41 PM
From: yard_man	Read Replies (1) \| Respond to of 19219

great -- I'll take the other side -- waiting for them to trash premiums on Aug puts into the close --

To: J.T. who wrote (17583)	7/28/2003 6:03:49 PM
From: J.T.	Read Replies (2) \| Respond to of 19219

Is latest U.S. economic turnaround for real? New data show second-half pickup gathering steam Jason Chow Financial Post nationalpost.com Saturday, July 26, 2003 In each of the past three years, economists have been predicting the U.S. economic rebound will happen during the last six months of the calendar year. The much-vaunted "second-half recovery" didn't occur in 2001 or 2002 -- but this year, things could be different. After three years of sluggish growth, the U.S. economy seems to have finally hit a sweet spot. Recent data is pointing to good times ahead for a country whose economy has been dragging its feet since 2000 as everything from employment to manufacturing activity to corporate profits are showing signs of a turnaround. "Until recently, the signs were mixed," said economist Gerald Cohen at Merrill Lynch in New York. "But statistic by statistic, we're seeing things picking up." The case for the optimists is getting stronger: Yesterday, monthly reports showed that new home sales surged by 4.7% in June from the previous month to an all-time high as consumers took advantage of record-low mortgage rates. Meanwhile, durable goods orders, which include everything from heavy machinery to airplanes, increased by 2.1% in June from the previous month, suggesting to some pundits that business spending is on the way up. Earlier in the week, a report from the U.S. Labor Department revealed jobless benefit claims fell below 400,000 for the first time in nearly six months. Stock markets have picked up on the optimism. The benchmark Standard & Poor's 500 index has gained 25% since its March 11 lows. Then there's the Economic Cycle Research Institute's weekly leading index -- a broad gauge of the economy that is calculated by taking into account seven different economic indicators. It rose this week to a 16-year high. "It's on fire, a phrase we don't get to use very often," said Lakshman Achuthan, managing director at ECRI. Moreover, U.S. corporations continue to report strong earnings. So far, about two-thirds of the companies listed on the S&P 500 index have reported their earnings for the spring quarter and have posted a 8.3% increase in profits. More impressive is the fact that corporate profits, on average, have beat Wall Street expectations by 6.2%. "The business sector that has lagged is finally showing strength," said economist Steven Wieting at Smith Barney in New York, who predicts economic growth in the second half of the year to run at an annual rate of 4.5% and recently increased his outlook for earnings growth for S&P 500 companies. "The recent data has confirmed our optimistic forecast." Even the U.S. federal government's fiscal situation is reported to be better than expected. After two massive economic stimulus plans, tax cuts and increased defence spending, many observers worried about a ballooning deficit. But Wall Street firms don't think the deficit will be as bad as the White House thinks. According to a Bloomberg News survey of 22 major bond-trading firms, the shortfall will probably reach a record US$432-billion in fiscal 2003, a level that is well below the US$455-billion the government predicted last week. Not all economists have proclaimed victory yet. Recent bond market movements could prove to be a double-edged sword to the recovery: Bonds are selling off and prices are dropping, forcing bond yields to rise as markets expect a growing economy and rising inflation. (Bond prices and yields move inversely to each other.) Rising bond yields could threaten the economic rebound: Since long-term borrowing costs, such as mortgages and corporate loans, are tied to bond yields, a rise in yields in effect raises the rate of interest charged. Higher mortgage rates could choke off the housing boom while higher long-term interest rates could restrict a rebound in business spending. While bond markets may prove to be the wild card of the economic recovery, skeptics can also point to recent history as a reason for their negative outlook. Economic indicators in the past have suggested strength but failed to materialize into a fullblown recovery. In both the spring of 2001 and 2002, manufacturing indicators and inventory counts suggested that business spending was picking up in the past. Stock markets rallied in anticipation of a full-on economic rebound, like in the period between April and May 2002 when stocks rose 19%. Once the economic data deteriorated, investors realized the recovery would not materialize, and stocks subsequently fell to new lows. Mr. Wieting contends this time is different, if not simply because geopolitical uncertainty has decreased since the end of the Iraq war. "The war is not just an excuse for the downturn. We saw some good corporate upturn up to October 2002, then we had political uncertainty and it led to a kind of mini-recession. We delayed the recovery big time." *************