Forum Archive Index - June 2002

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

In reply to Steven, this taken from Bloomberg.

 

Before I get replies (if anybody cares!), think about this.  The US economy is the engine room of the world.  Like it or not.  When it stops so does the world (including Aotearoa).

 

These figures below are astounding.  Read them alongside the US $400 billion current trade deficit for the last quarter. 

 

I am selling everything on Monday (loss or not).  I am into Gold and cash.  Cyclone 'Greenspan' is heading our way.  Expect it to arrive this time next year.  Oh I forgot to add......the 5th largest bank in Germany (you know....the hub of the European economy) had to be bailed out last week.  It has no $$$.  Tighten those belts.

 

The following snippets are a summary of the article below:

 

1.  The DOW index fell 11 percent over the past five weeks and has dropped 14 percent year-to-date. The benchmark's decline this year would be its steepest first-half slump since 1970.

2.  Based on changes in the Wilshire 5000 Total Market Index, the broadest measure of U.S. stocks, the market value of U.S. shares has fallen $1.52 trillion this year.

3.  IBM dropped $2.83 to $68.75. Daniel Niles, a Lehman Brothers Inc. analyst, cut earnings estimates for the world's biggest computer maker because technology spending is slowing. IBM shares have plunged 43 percent this year, the second-steepest loss in the Dow after AT&T Corp.'s 46 percent loss.

4.  Some 1.8 billion shares traded on the New York Stock Exchange, the ninth-most on record. (ie massive selling).

5.  Phil Orlando, who manages $6 billion as chief investment officer at Value Line Asset Management, expects consumers to keep spending on their homes. ``The fundamentals continue to improve, but no one wants to think about that,'' he said. Instead, investors are ``focused on terrorism.''

The above highlighted portion is B...shit.  Typical funds manager justifying his fee!  I apologise for playing devil's advocate ad nauseum but I feel that investors need to be aware of this.  It doesn't matter how many pizzas RBD are selling; if USA goes haywire watch us follow.

cheers

Nk 

U.S. Stocks Fall, Finishing Losing Week; Health Shares Decline
By Perri Colley McKinney

New York, June 21 (Bloomberg) -- U.S. stocks tumbled, pushing the Standard & Poor's 500 Index below 1000 for the first time since the aftermath of the Sept. 11 terrorist attacks. Benchmark indexes fell for the fifth straight week.

The eight biggest U.S. companies declined, reflecting a weaker-than-expected rebound in corporate profits, concern over the prospect of more terrorism and what President George W. Bush called an ``overhang of distrust'' after Enron Corp.'s collapse.

Drug shares led the losses after the Wall Street Journal reported that Merck & Co. boosted revenue with accounting methods not used by its rivals. International Business Machines Corp. slumped after the third Wall Street analyst this week said its earnings will fall short of forecasts.

``There was hope we would start seeing a pickup in second- quarter earnings, and it's just not the case,'' said Liz Miller, who helps invest $750 million at Trevor Stewart Burton & Jacobsen Inc. The firm's largest holdings are defense stocks, including Lockheed Martin Corp., which reached a record high today.

The S&P 500 fell 17.15, or 1.7 percent, to 989.14, the lowest since Sept. 21, when the index reached a three-and-a-half-year low. Drugmakers such as Pfizer Inc. accounted for about a quarter of the drop.

The Dow Jones Industrial Average lost 177.98, or 1.9 percent, to 9253.79, led by IBM. The Nasdaq Composite Index shed 23.79, or 1.6 percent, to 1440.96, also its lowest close since Sept. 21.

For the week, the S&P 500 slipped 1.8 percent, as Best Buy Co. cut its profit forecast and Advanced Micro Devices Inc. said sales will fall short of estimates.

This Year's Plunge

The index fell 11 percent over the past five weeks and has dropped 14 percent year-to-date. The benchmark's decline this year would be its steepest first-half slump since 1970.

The Dow lost 2.3 percent for the week, bringing its five-week drop to 11 percent. It has declined 7.7 percent this year. The Nasdaq's 4.2 percent loss this week extended its year-to-date drop to 26 percent.

Based on changes in the Wilshire 5000 Total Market Index, the broadest measure of U.S. stocks, the market value of U.S. shares has fallen $1.52 trillion this year.

The decline in health stocks was triggered by the report on Merck. The bookkeeping concerns added to slowing earnings growth in the industry as patents expire and makers of generic drugs win more customers.

`Under Pressure'

``The whole industry has been under a lot of pressure, and I don't see it abating anytime soon,'' said Fred Kuehndorf, who helps manage $2 billion at Ashland Management Inc. ``The long-term earnings potential of these companies could be notched down'' even further, he said.

Merck declined $2.22 to $49.98, a four-year low. The Journal said the second-biggest U.S. drugmaker's Merck-Medco benefits unit books as revenue co-payments made to pharmacies when they fill prescriptions, even though drugstores keep that money. Merck said the system, which has no effect on reported revenue, is appropriate, the paper reported.

Merck's bigger rival, Pfizer, fell $2.05 to $34.03. Johnson & Johnson, the largest medical-device maker, shed $2.04 to $53.

Ashland sold its stake in Merck late last year and has been adding hospital and managed-health-care shares, such as Tenet Healthcare Corp. and WellPoint Health Networks Inc.

IBM Slides

IBM dropped $2.83 to $68.75. Daniel Niles, a Lehman Brothers Inc. analyst, cut earnings estimates for the world's biggest computer maker because technology spending is slowing. IBM shares have plunged 43 percent this year, the second-steepest loss in the Dow after AT&T Corp.'s 46 percent loss.

The forecast by Niles followed reports by analysts at Salomon Smith Barney and Morgan Stanley saying IBM's earnings would lag current estimates.

The S&P 500's largest companies also declined.

General Electric Co., the biggest company by market value, slid 75 cents to $28.95. Microsoft Corp., the second-biggest, fell $1.82 to $52.28.

Citigroup Inc., the largest financial-services company, fell 69 cents to $39.80. American International Group Inc., the biggest insurer, slumped $1.01 to $67. Wal-Mart Stores Inc., which generated the most revenue, retreated $1.52 to $54.98.

Amdocs Ltd. plunged $5.96 to $8.60. The maker of billing software for phone companies said third-quarter profit excluding certain costs will be almost 40 percent less than its previous forecast.

`Triple Witching'

Volume picked up with the quarterly ``triple witching'' expiration of stock-index futures, index options and options on stocks. Some 1.8 billion shares traded on the New York Stock Exchange, the ninth-most on record.

Trading usually quickens during ``witching'' sessions as investors buy or sell stocks and options to replace the ones that expire.

Almost four stocks fell for every three that advanced on the NYSE. Advancing and declining stocks were about even on the Nasdaq Stock Market.

Bed, Bath & Beyond Inc. advanced $1.76 to $36.26. The biggest U.S. household-goods retailer said first-quarter profit surged 54 percent, the largest increase since the company went public in 1992.

Phil Orlando, who manages $6 billion as chief investment officer at Value Line Asset Management, expects consumers to keep spending on their homes. ``The fundamentals continue to improve, but no one wants to think about that,'' he said. Instead, investors are ``focused on terrorism.''

The Russell 2000 Index of smaller stocks rose 0.82, or 0.2 percent, to 461.07. The Wilshire 5000 declined 141.47, or 1.5 percent, to 9389.98. The total value of U.S. stocks fell by $163 billion.

----- Original Message -----

From: Steven Tong

To: sharechat@sharechat.co.nz

Sent: Saturday, June 22, 2002 12:24 PM

Subject: [sharechat] DOW V NIKKEI

The macro / political situation gets worse by the week. Does anybody have any thoughts as to which index will fall through 7000 first. My guess is it will be the Nikkei when

their insolvent banks go belly up next year.

 

The domino effect is starting in South America Brazil, Argentina and now the minor economies.

 

 

Gold is starting to climb, $ 330 will hopefully be taken out next week.

 

 

DOW - Short

GOLD- Long