The fights are getting boring. NO i didn't see the Tyson fight. Smiles, I'm writing a paper. I still remain cautious regarding the market, however.
On the side, I got a news alert that seemed interesting for general interest:
PaineWebber VALUE LINE MANAGER Alan Hoffman's view seemed to sum up the late-week mood: “We're probably setting up a pretty good base for rational expansion in 1999,” he told CNBC.
Indeed, the Dow shot up more than 220 points on Friday after falling more than 500 points in the first four days of the week.
Regarding Brazil, a sense of been-there-done-that has taken hold, at least for the moment. No matter how dire the economic situation appears — with its implications for the rest of South America and the developing world — investors remain determined to take solace in stock market resiliency. Notably, Brazil's stock market soared an unheard-of 33 percent on Friday.
Art Cashin, director of floor operations for PaineWebber at the New York Stock Exchange, noted this week on CNBC that investors see the Brazilian situation as nothing more than a rerun of last summer's Asian/Russian currency crisis — an event that sent U.S. shares plummeting at first, only to return to new highs. He sums up the common view this way: “Wait a minute, I've seen this movie before, back in August. Nobody dies at the end. I think I'll buy everything.”
Brazil unravels; what's ahead?
Indeed, Americans act blissfully uninterested in international events of any sort, perhaps conditioned by previous, unrealized threats that foreign crises will lap up on U.S. shores.
Whiplash on Wall Street. After four consecutive down sessions, including a two-day, 353.75 drop on Wednesday and Thursday, the Dow soared back 220 points Friday to close the week with a loss of 3.1 percent.
Certainly, the collapse of many Asian economies some 18 months ago hasn't taken the dire domestic toll predicted, especially on America's crucial technology industry. The prevailing takeaway: Perhaps the global village isn't so interconnected after all.
Military action fails to move investors, either. Unlike in 1991, the U.S. attack on Iraq in Demember (albeit far more limited than the earlier one) had little discernable effect on the stock market.
In another year, the threat of an interest-rate change might temper enthusiasm — and stock prices. But in this break-the-mold environment, even that lever keeps moving in a damn-the-torpedos fashion. Exhibit A: last October's surprise rate reduction by the Fed.
To be sure, the Brazilian crisis (not to mention the U.S. impeachment proceedings) still could snowball and affect the domestic economy in unforeseeable ways. The currency swoon there — a devaluation Wednesday of 8 percent and subsequent further dive — defied a massive effort by the International Monetary Fund to prop up Brazil's currency, the real, and it sent that country's key stock index down almost 10 points on Thursday alone. Most troublesome is the prospect of Brazil's weakness spreading to other U.S. trading partners, principally Mexico.
Dow soars 220 points, Nasdaq jumps 71
And under any circumstances, the past couple of weeks have been extraordinary on Wall Street. Even as the impeachment of President Clinton escalated in Washington, the Dow Jones industrials pumped ever higher, to an all-time high of 9,643 on Jan. 8, only to fall nearly 2 1/2 percent on Thursday alone.
But even against this backdrop, a relentless stream of bullish data kept pouring in for American investors to digest. Among them:
* Consumer confidence in this country — an important indicator of spending patterns — hit a new high this week, according to poll results released Jan. 13 by Money Magazine/ABC News.
* Data from the just-ended holiday retail season proved positive as well. Retail sales grew 0.9 percent in December, according to Commerce Dept. figures released Jan. 14. Consumer spending during 1998 rose at its fastest pace since 1984. The nation is enjoying its longest peacetime expansion ever.
* Inflation remains low. Thursday, the Labor Dept. said the closely watched consumer price index rose only 0.1 percent in December. For all of 1998, consumer prices rose just 1.6 percent, their smallest increase in a dozen years.
* Unemployment remains a non-factor, according to the latest data, even amid a plethora of large layoffs. Just 4.5 percent of the U.S. work force remained jobless in 1998, the lowest in 29 years.
* Even profits — which had been seen as a potential rally killer in early 1999 — have soared above expectations for many key companies. Intel Corp., for instance, a bellwether among technology issues, this week posted a quarterly profit of $1.19 a share, well ahead of the $1.07 a share projected by analysts, according to First Call.
A legacy of layoffs
Despite the lowest unemployment rate in 29 years, 1998 was the peak layoff year in a decade. This table shows selected layoffs over the last few months.
Company Jobs to be cut Reason
SOURCE: MSNBC news services
Numbers like these are pushing many analysts and portfolio managers to forecast further gains, despite the astounding run-up the market has seen over the past four years. (The Dow grew 16 percent in 1998 after three straight years of 20-percent-plus growth.)
And who's to argue with them. In a world where single stocks can rise several hundred percent in a day, no prediction, no recommendation sounds quackish.
Consider Internet star Yahoo!. On Monday alone, its shares rose by more than $100 during the session before closing up $71.75 at just above $415.
What's extraordinary, of course, isn't how astounding that stock movement is, but rather how ordinary it has become.
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