Baiter,
I didn't infer anything but check this out and sleep well with all your long position tonight.......this could be the begining of the correction that everybodys been waiting for. We must test the old lows before going further up and this is a go excuse for it as you can get.
Sunday January 25, 6:01 pm Eastern Time
Wall St faces more losses as Clinton woes deepen
By Huw Jones
NEW YORK, Jan 25 (Reuters) - U.S. stocks, bonds and the dollar were set
to slide further this week as the sex scandal threatening Bill Clinton's
presidency deepens, plunging the markets into more uncertainty, analysts
said.
President Clinton is not expected to discuss the scandal in public until
after his State of the Union address Tuesday evening, thereby prolonging
mounting unease on Wall Street.
''There is no reason to feel there will be any difference from the way
bonds, stocks and the dollar behaved on Friday when all three went
down,'' said Alan Ackerman, market strategist at Fahnestock & Co.
''The president's silence leaves many questions unanswered, and may
affect the significance of the State of the Union message. It continues
to string out the uncertainty that Wall Street finds unacceptable,''
Ackerman added.
Clinton has denied having an affair with former White House intern
Monica Lewinsky, and asking her to lie about it.
Privately, however, some analysts believe Clinton may have to resign and
leave Vice President Al Gore to take up the reins.
Traders partly blamed the scandal for the slide in the dollar and the
bond Friday, along with volatility and modest losses in stocks.
''We are still trying to discern how the markets are reacting to the
president's problems,'' Philip Braverman, chief economist at DKB
Securities, said. ''Nothing has happened to clear the air.''
The worry is that a White House paralyzed by scandal will be ineffective
in dealing with international issues such as Iraq, and garnering
Congressional support for more cash to bail out South Korea, Braverman
said.
Friday, the benchmark 30-year bond fell 1-18/32 points, with the yield
soaring to 5.98 percent, its highest level since closing at 6.02 percent
on Dec 11, 1997.
The dollar fell to a three-week low against the German mark, and slid
against the Japanese yen. The Dow closed off 30.14 points at 7700.74
after a volatile session where rumors about the White House rattled
investors.
''The risk is certainly on the side of more turmoil in the presidency,
and therefore in the dollar and the bond,'' David Orr, chief capital
markets economist at First Union, said.
Apart from keeping up with the unfolding Clinton scandal, the financial
markets also face this week a slew of economic indicators, more
corporate earnings reports and Federal Reserve Chairman Alan Greenspan's
update on the economy.
Greenspan is set to speak before the Senate budget committee Thursday,
and then before the House banking subcommittee on Friday where he will
be joined by Treasury Secretary Robert Rubin and his deputy, Lawrence
Summers.
They will describe Asia's impact on the United States as talks to
resolve South Korea's debt crisis near resolution, though Japan is still
mired in recession.
Orr said the week's key indicator will be Tuesday's Employment Cost
Index for the fourth quarter of 1997.
Economists on Wall Street expect a rise of 0.9 percent, just above the
prior month's 0.8 percent hike.
''If that number is 1.0 percent or higher, it would take more of the
concept of a Fed ease out of the market,'' Orr said. ''But it would
probably not put a Fed tightening in the picture as long as Asia is in
free fall.''
Other indicators due this week include durable goods orders in December
on Wednesday, and fourth quarter Gross Domestic Product Friday.
The long bond yield is expected to rise above 6 percent this week.
''I think the long bond is going to a resting place of 6 percent or
slightly above in the yield, but we have moved a long way in that
direction already,'' Braverman said.
First Union's Orr said a move in the yield to these levels would present
a buying opportunity for investors.
Inflation was expected to remain under 2 percent over the next couple of
years, which would suggest a yield more in the 5 percent range, Orr
said.
This week will be heavy on fourth quarter earnings reports from the drug
and oil majors, and from consumer non-cyclicals. But analysts are more
interested in comments on forward earnings that some companies present
with their results.
''There has been a spate of negative guidance on the March 1998
quarter,'' said Charles Hill, director of research at First Call, an
earnings tracking firm.
''In the last two weeks, and especially the last few days, the estimates
for both the March 1998 quarter and the year have been coming down
faster than the normal trimming of recent years,'' Hill said.
Some fear the Clinton scandal, coming on top of Asian turmoil and
mounting worries that U.S. corporate earnings will be less rosy this
year, may trigger a correction in what analysts see as an overvalued
stock market. |
