Forum Archive Index - June 2002

["Nick Kearney" <nickk@quicksilver.net.nz>]

Lindley

Here is an example.

I have to agree with Steven although I won't say it with his vigour!

Nk

U.S. Economy: Confidence Falls, Production Slows (Update2)
By Carlos Torres, Siobhan Hughes and Monee Fields-White


Washington, June 14 (Bloomberg) -- Consumer confidence had its biggest drop
in June since the terrorist attacks, and industrial production slowed in May
as the economic recovery faltered.

``People had been saying it's just a matter of time before things get
better,'' said James Paulsen, chief investment officer at Wells Capital
Management in Minneapolis, which has $75 billion in assets under management.
``Well, the lag is too long now.''

The University of Michigan's June consumer sentiment index fell to 90.8 from
96.9 in May. That's the largest decline since a 9.7-point decrease in
September. Production at factories, utilities and mines rose 0.2 percent
last month after a 0.3 percent gain in April, the Federal Reserve said.

Flagging confidence and production follow a larger-than- expected decline in
retail sales last month and add to a picture of slowing growth. The economy
probably expanded at a 2.9 percent annual pace in the second quarter, which
ends this month, about half the 5.6 percent rate of the first, according to
the Blue Chip Economic Indicators survey released this week.

This week's declines retail sales and confidence followed a series of
reports last week showing a boost in May to employment and increased
business at manufacturers and service companies.

``We've got some headwinds now, so economic growth has slowed considerably,
perhaps a lot more than we anticipated,'' said Sung Won Sohn, chief
economist at Wells Fargo & Co. in Minneapolis.

Consumer Spending

Consumer spending, which accounts for two-thirds of the economy, probably
will rise at a 2.6 percent annual pace this quarter, down from a 3.2 percent
rate from January to March, according to the latest Blue Chip Economic
Indicators survey, released this week.

The drop in confidence ``is a soft patch which will not last,'' Sohn said.
``We will get back onto firm ground once we get through the second
quarter.''

The Dow Jones Industrial Average fell 22 points, or 0.2 percent. The
Standard & Poor's 500 stock index fell 1 point, or 0.1 percent. The Nasdaq
Composite Index rose 10 points, or 0.7 percent.

The Treasury's 4 7/8 note that matures in February 2012 rose 21/32 point,
pushing down its yield 9 basis points to 4.81 percent. A basis point is 0.01
percentage point.

Economists had expected the Michigan index, which is based on a phone survey
of about 500 households, to fall to 96.5, according to the median estimate
of 47 forecasts in a Bloomberg News survey.

Expectations Index

The university's separate index of expectations, based on optimism about the
next one to five years, dropped to the lowest level since December.

Concerns about the threat of more terrorist attacks and a lack of faith in
corporate accountability that has sent stock prices tumbling may prompt
consumers to rein in spending and slow the economy's rebound, economists
said. That may help explain declines in sales at retailers such as May
Department Stores Co. and Federated Department Stores Inc.

Retail sales last month fell 0.9 percent, three times the drop economists
expected and the biggest decline in six months, according to a report
yesterday from the Commerce Department.

The economy is expected to cool to a 2.9 percent annual growth rate in the
quarter that ends this month, after expanding at a 5.6 percent pace in the
first three months of the year, according to the Blue Chip survey.

Fed Policy

With growth slowing, Fed policy makers may wait for several months to raise
the benchmark overnight bank lending rate, economists say. At 1.75 percent,
the rate is the lowest in four decades.

A slowdown in automaking and utility output contributed to the smaller gain
in industrial production last month. Economists had expected a 0.3 percent
increase for May.

Still, May's increase marked the fifth straight rise in industrial
production, which hasn't happened in almost two years. Manufacturing is
rising because inventories have fallen below levels needed to keep meeting
demand. Production of semiconductors and office equipment rose.

``These numbers are entirely consistent with the theme of a steady but slow
recovery,'' said Vincent Boberski, a senior economist at RBC Dain Rauscher
Inc. in Chicago. ``A good deal of the drag in manufacturing appears to be
due to the natural slowdown in auto production after a frenetic six
months.''

A separate report today from the Commerce Department showed that business
inventories fell 0.2 percent in April, the 15th straight decline. The drop
brought inventories to the lowest level in 2 1/2 years.

``Inventory-to-sales ratios are now extremely low,'' said Ian Shepherdson,
chief U.S. economist for High Frequency Economics Ltd. in Valhalla, New
York. ``Companies do need to rebuild stocks.''

The amount of capacity in use rose last month to 75.5 percent, the highest
since September. The plant-use rate had fallen to an almost 19-year low of
74.4 percent in December and is still well below the average 81.8 percent
rate during the record expansion from March 1991 to March 2001.



----- Original Message -----
From: "Lindley Smith" <lindleysmith@bigfoot.com>
To: <sharechat@sharechat.co.nz>
Sent: Saturday, June 15, 2002 3:27 AM
Subject: Re: [sharechat] Dont underestimate the dynamism of the U S economy
Steven


> Where's the analysis/reasoning/logic to back up those statements?
>
> I'll agree that the NASDAQ was a bubble.
>
> Here's one for you to think about and comment on.
>
> As I see it, gold like all the other metals/minerals has a falling cost of
> production. In the long term the price of gold will tend to track the cost
> of production. Any 'variation' from that trend could losely be termed a
> 'bubble'. Therefore gold IS in a bubble. Has it just started, how long
will
> it continue for, has it popped already?
>
> Now back to the DOW, and where it is going. Has anyone got a graph of the
> DOW going back . . . forever? I'd be interested to see a long term
technical
> analysis of it showing what it's level could be if it had followed long
term
> historical patterns in the last 10-20 yrs.
>
> I was looking at the FTSE the other day, and the few companies that I
> glanced at all had reasonable PEs (10-15), so maybe it is at a reasonable
> level.
>
> Here's another one. Why do all indices weight their components based on
the
> size of the company? Personally I'd prefer indicies that weren't weighted.
>
>
> > Just watched the opening bell on Wall Street, we are in freefall. Hope
> > everybody dumped their  international share based mutual funds this
week.
> > The US  market
> > will continue to fall and 4000 - 6000 on the DOW is very likely.
> >
> >
> > Gold is about to explode, is gold in a bubble ? after 20 years in a bear
> > market it has risen form $ 255 to $320. This is not a bubble, the NASDAQ
> at
> > 5000 was a bubble.
> >
> > Unhedged Gold and Silver producers will expode, its only a matter of
time.
> > The gold bullion banks are fighting the trend, they can only manipulate
> for
> > so long.
> > When gold hits $354 an ounce, the derivatives market will implode.
> >
> >
> >
> > >
> > >
> > > > Steven Tong wrote;
> > > >
> > > > "There will BE NO RECOVERY IN US EQUITIES THIS YEAR"
> > > >
> > > > I recall another stumble of the U S economy. I refer to the savings
&
> > loan
> > > > fiasco.
> > > >
> > > > A rash of unwise lending by small community banks called savings &
> loan
> > > banks
> > > > had threatened a bust the amounting to what looked like several
> > telephone
> > > > numbers strung together.
> > > >
> > > > The U S congress took over these banks and ruthlessly liquidated
them.
> > > Thanks
> > > > to an economic recovery they were able to sell off these assets. I
> > cannot
> > > > recall exactly, but the net result was a small gain or loss for the
U
> S
> > > > taxpayer.
> > > >
> > > > My point is that the U S was able to take decisive corrective action
> to
> > > > ensure stability and recover.
> > > >
> > > > If there is a melt down on Wall Street I guess we will see the same
> > thing.
> > > >
> > > > The DOW @ 20,000 in 2006?
> > > >
> > > > Boop-doop-de-do Marilyn
> > > >
> > > > Short on diamonds, long on optimism
> > > >
> > > >
> > >
> >
>
> --------------------------------------------------------------------------
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> > > >
> > >
> > >
> >
> >
> >
>
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