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To: Secret_Agent_Man who wrote (344828)	10/2/2007 9:52:22 PM
From: Giordano Bruno	Respond to of 436258

Four at Four: Suckers’ Rally Posted by David Gaffen The Dow and S&P pulled back today, but the Nasdaq was up, the Russell 2000 put together a nice increase, and more stocks were up on the day on both the Big Board and the Nasdaq in what some are starting to term a “sucker’s rally.” Prior to recessions in 1990 and 2001, the markets put together its last-ditch surges before succumbing to the reality of a slowing economy, one the Fed couldn’t shake off with rapid rate cuts. Recalling 2001, RGE head economist Nouriel Roubini says, “it was only in June when it was obvious that the economy was sinking in spite of the Fed attempt to bail it out that the stock market started to fall again.” Reality tends to seep in here and there, and so far, all selling has been met with a smile and a buy order, but the economic situation, Mr. Roubini says, is arguably just as poor now as it was in August. The “Save Us From Ourselves” Brigade is alive and well, though, as Paul Ballew, General Motors manager of sales analysis, expressed expectations for further cuts of 0.75 to 1 percentage point in interest rates. He said the cut was needed, saying “we support and applaud the Fed’s move.” Obviously, this hasn’t been enough. In the last several weeks the views from corporate executives have run the gamut, from scolding the Fed for not acting more quickly, to applause for its eventual move. The recent market rally has all of the tell-tale signs of a Fed-induced gasp as well, one founded on hope that the interest-rate cuts will help economic growth increase to a more favorable level. Notably, he also said that there has been no change in credit terms for car buyers — a considerable concern for investors and consumers. Eventually, investors in auto companies will focus again on sales of vehicles, but for now other issues remain at the forefront. Several analysts noted today that the new details of GM’s contract with the United Auto Workers look more favorable to GM than originally expected, part of the reasoning behind GM’s 2.8% rally and Ford Motor’s 4% advance. “Despite our conservative expectations earlier in the year, we now believe that the 2007 contracts represent a significant (albeit incomplete) longer-term unwinding of the automobile entitlement economy,” note analysts at Lehman Brothers. Meanwhile, Morgan Stanley, in a note today titled “No Devil in the Details,” says the terms are more favorable than headlines suggested, a big change “from recent events (e.g., the 2005 healthcare deal) when the details were usually less favorable than the headlines.” Sales were for the most part lackluster, even though GM eked out a small increase. The stock market may be immune to the woes in the housing market, but the rest of the economy is not. The 6.5% decline in the August pending home sales index was dreadful, dropping the index to its worst level since tracking began in 2001, and the fallout in other sectors remains apparent. Morgan Stanley cut 600 jobs in its lending divisions today and overall, outplacement firm Challenger, Gray & Christmas last month said that nearly 49,000 cuts have been announced in mortgage and subprime lenders in 2007, compared with 13,000 in all of 2006. “There is no sign yet that the bottom of the market is near,” noted economists at High Frequency Economics “With price declines accelerating, real mortgage rates are very high and rising further. The downside from here is still substantial.” WSJ