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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (44776)	10/8/2003 2:41:10 AM
From: IQBAL LATIF	Respond to of 50167

Last week, the Labor Department reported the first gain in nonfarm payrolls in the last nine months. The overall rate of unemployment stayed at 6.1%, but at least it didn't get worse. This could be a turning point in the employment cycle. Bear in mind that the employment rate is a so-called coincident indicator — a number that turns around once a recovery is well underway. Of more importance to investors are the leading indicators. Last month the 10 leading indicators had their fourth straight monthly increase. The biggest gains in the components that make up the index were interest rates, vendor performance, money supply and building permits. Much less attention is paid to the so-called coincident indicators (which, as the name implies, lag the leading indicators). Although the coincident indicators stayed flat last month, three of the four showed solid gains: personal income, manufacturing sales and the ratio of inventories to sales. Only the employment number dropped, and we now know that has stabilized. Finally, there are the lagging indicators, which were flat. (Readers interested in the various indicators can find a fuller analysis on the Conference Board's Web site at globalindicators.org.) This time, the numbers are clearly indicating that the long hoped-for recovery is underway. This, more than any gazing into Halloween crystal balls, makes me feel that a crash this month is unlikely, and if it happened it would be unwarranted. That doesn't mean the market won't decline this month. We're on the brink of earnings season, and investor expectations are pretty high. Earnings are all about expectations, so don't be surprised if a company reports solid gains, and its stock goes down because the numbers weren't quite as good as investors had hoped. Given the dearth of pre-announcement earnings warnings, it looks like earnings, too, will confirm that a healthy recovery is underway. <last week, the Labor Department reported the first gain in nonfarm payrolls in the last nine months. The overall rate of unemployment stayed at 6.1%, but at least it didn't get worse. This could be a turning point in the employment cycle. Bear in mind that the employment rate is a so-called coincident indicator — a number that turns around once a recovery is well underway. Of more importance to investors are the leading indicators. Last month the 10 leading indicators had their fourth straight monthly increase. The biggest gains in the components that make up the index were interest rates, vendor performance, money supply and building permits. Much less attention is paid to the so-called coincident indicators (which, as the name implies, lag the leading indicators). Although the coincident indicators stayed flat last month, three of the four showed solid gains: personal income, manufacturing sales and the ratio of inventories to sales. Only the employment number dropped, and we now know that has stabilized. Finally, there are the lagging indicators, which were flat. (Readers interested in the various indicators can find a fuller analysis on the Conference Board's Web site at globalindicators.org.) This time, the numbers are clearly indicating that the long hoped-for recovery is underway. This, more than any gazing into Halloween crystal balls, makes me feel that a crash this month is unlikely, and if it happened it would be unwarranted. That doesn't mean the market won't decline this month. We're on the brink of earnings season, and investor expectations are pretty high. Earnings are all about expectations, so don't be surprised if a company reports solid gains, and its stock goes down because the numbers weren't quite as good as investors had hoped. Given the dearth of pre-announcement earnings warnings, it looks like earnings, too, will confirm that a healthy recovery is underway. www.smartmoney.com