Thursday, 10/10, Market WrapUp (Recession Part 2?)

Financial Sense Online ^ | 10/10/2002 | Scott Middleton

[rohry]

 
Weekday Commentary from Scott Middleton
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Recession, Part II?

Source: CNN/Money

STORM WATCH UPDATE Bubble Troubles Part I Double, double, toil and trouble; fire burn and cauldron bubble. by Jim Puplava 9/13/2002 Bubble Troubles Part II Yes, Virginia, There IS a Housing Bubble by Jim Puplava 9/20/2002

Bubble Troubles Part III It Ain't Over Yet for the Stock Market by Jim Puplava 9/27/2002

Thursday Market Scoreboard  October 10, 2002
Dow Industrials		247.68	7533.95
Dow Utilities		13.71	181.28
Dow Transports		83.75	2096.77
S & P 500		27.15	803.92
NASDAQ		49.26	1163.37
US Dollar to Yen			123.695
US Dollar to Euro			.9854
Gold		3.40	317.40
Silver		0.07	4.285
Oil		0.38	28.97
CRB Index		1.18	224.79
Natural Gas		0.09	3.828
	10/10	10/09	Change
HUI (Amex Gold Bugs Index)
Close YTD	109.24	108.66	0.58 67.54%
52week High	147.82	06/03/02
52week Low	59.86	11/26/01
XAU (Philadelphia Gold & Silver)
Close YTD	60.71	61.64	0.25 11.53%
52week High	88.65	05/28/02
52week Low	49.23	11/19/01
All market indexes
Nyquist Column 10/08 No Turning Back

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 Market WrapUp for the Week 
Monday  l  Tuesday  l  Wednesday  l  Thursday  l  Friday

The Week in Graphs Storm Watch Geopolitical News Energy Resource Page Precious Metals Raw Materials

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^{Thursday, October 10, 2002}

Bear Market’s Rally
Today the Dow Jones Industrial Average surged 247.68 points, or 3.4% to 7,533, the Nasdaq Composite soared 49 points, or 4.4% to 1,163.44, and the Nasdaq 100 Index jumped 42 points, or 5.24% to 849. The Standard & Poor's 500 Index spiked 27.18 points, or 3.5% higher while the Russell 2000 Index of small-capitalization stocks ascended 2.79%. All nice rebounds considering where the recent sell offs have taken us. One thing I noticed that was different about today’s rally in comparison to those of past days was that the various news outlets stayed away from the “it’s the bottom” trumpet this time around. While I’m sure some made their trumpets sing the same old tune, many did not.

In other news today, S&P’s Investment Policy Committee pointed out that October is labeled the “bottoming month” for good reason; since 1946, eight of the 24 market declines of 10% or more for the S&P 500 ended in October. Does that mean we’ll see the bottom before this month is over? I wouldn’t bet on it, but maybe just a short-term bottom will be reached. Another steep leg down in this market is in the cards. Could it start tomorrow?

On tap tomorrow will be some much anticipated economic releases as the Producer Price Index (PPI), Retail Sales, and the Consumer Sentiment figures will be released. Expectations of a weakening consumer could be either verified or nullified with tomorrow’s data. The Consumer Sentiment indicator as conducted by the University of Michigan is expected to fall to 85.5 from a level of 86.1 in September. Confirmation of these figures will come from the measure of retail sales, which are expected to decrease 0.9% in September, reversing last month’s 0.8% gain. Auto sales were weak in September and will certainly dampen total sales. Llisten carefully to the way the news is reported as many outlets will report the figures with Auto Sales stripped out.

Volume was heavier-than-usual at 2.03 billion on the NYSE and 1.81 billion on the Nasdaq Stock Market. Market breadth was marginally positive, with winners beating losers by 20 to 12 on the NYSE and by 21 to 13 on the Nasdaq.

Overseas Markets
European stocks gained, led by Royal Philips Electronics NV and Siemens AG, as U.S. earnings reports raised expectations for higher profit at companies that do business in the world's largest economy. The Dow Jones Stoxx 50 Index added 2.8% to 2341.03, snapping a five-session, 7.4% losing streak. All eight major European Markets were up during today’s trading.

Asian stocks fell, with the Nikkei 225 Stock Average on course for its worst week in almost two years. Exporters such as Fanuc Ltd. and Samsung Electronics Co. slid after a U.S. share tumble increased concern demand will wane. The Nikkei lost 1.2% to 8439.62. The average lost 6.5% so far this week, its biggest decline since the five days ended Dec. 22, 2000.

Bond Market
Government bonds finished with substantial losses as equities firmed. The 10-year Treasury note tumbled 23/32 to yield 3.655% while the 30-year government bond slid 31/32 to yield 4.715%.

© Copyright Scott Middleton, October 10, 2002

[EVO X]

Please expand a bit on the refinancing.

My credit union has been doing auto refinancing for some years now as a way to drum up business. Normally the credit union member will get a better interest rate than he had before. Evidently: if the members credit is good they can refinance at a higher rate for a longer period of time as well.

[Interesting Times]

What is the "Rise Protection Team?"

My sarcastic shot at Scott's last column, wherein he drew half a dozen little orange circles around that (down) day's recovery points, and described them as obvious points of intervention by the government's "Plunge Protection Team" to avert ultimate disaster.

Why, without the RPT's efforts today, we might well have had a 600 point rise in the Dow...

[Interesting Times]

(Rise Protection Team) -- The cabal that protects the interests of the nation's short sellers.

Exactly.

RPT, why have you foresaken me?

Perhaps they've been hibernating.

[teresat]

Most of the people who are refinancing are not refinancing for a shorter term but going back to a 30yr mortgage. I recently refinanced and went from 24yrs left on 30yr to a 20 year fixed and all my husbands friends have called us stupid. They say don't you want the money to "get a new car, go on a trip" etc.,etc. Oh yeah they tell us "don't you know debt is good?" I just don't get their reasoning one day they'll have to pay the piper.

[teresat]

Alot of above mentioned friends are using the additional cash to go on wine tours of France. Does anyone thing it would be rude 30yrs down the road when they have no money saved and are complaining about the miniscule amount from social security and that they can't afford their prescription drugs to tell them "I told you so?".

[rohry]

"My sarcastic shot at Scott's last column, wherein he drew half a dozen little orange circles around that (down) day's recovery points, and described them as obvious points of intervention by the government's "Plunge Protection Team" to avert ultimate disaster."

Good shot, I am not totally convinced about the PPT but I think it is a possible scenario...

[Interesting Times]

Good shot, I am not totally convinced about the PPT but I think it is a possible scenario...

Actually, I don't discount the existence of the PPT either.

I just think it's silly to discern their shadowy influence in every trading ripple.

[STONEWALLS]

"Alot of above mentioned friends are using the additional cash to go on wine tours of France. Does anyone thing it would be rude 30yrs down the road when they have no money saved and are complaining about the miniscule amount from social security and that they can't afford their prescription drugs to tell them "I told you so?"."

....I know exactly what you're talking about here...it's the old fable of the grasshopper and the ant all over again...the problem is there's a hell of a lot of those grasshoppers out there and they got the vote....I expect they'll find a way to avoid eating a meal at the table of consequences.....

Good luck to everybody, especially us ants!

Stonewalls

[meyer]

And I thank you again (even if I miss it once in a while). :^)

I'm finally convinced that the market is on drugs.

[meyer]

If it skyrockets then I sell. If not, who cares, I'll leave it to my kids...

D-D-Dad???

:^)

[lainde]

My thanks to the freepers that mentioned the Weiss rating on banks...looked up mine and it was "troubling" as the Dems say! Took some definitive action...(Lurker) lainde

[Black Agnes]

Nah, they'll be taking your saved money in the form of increased taxes to make up for their freespending ways now. Either way, you pay. You suck it up now...AND you'll suck it up later. Meanwhile, they get all the cool stuff now and stick the bills to someone else later. Isn't it good to be an ant?

[steveegg]

True. A one-day "miracle" makes for a bear trap for dummies. If the market can manage to string together 3-5 of those, then the discussion can be begin as to whether the corner's been turned or a sophisticated bear trap has been set.

[steveegg]

The cabal that protects the interests of the nation's short sellers.

RPT, why have you foresaken me?

<booming_echo_voice=on>Be patient, ye of little faith. We had to sucker some fresh meat into the scheme.<booming_echo_voice=off>

[steveegg]

Scott's back...

...and the lurkers return to the shadows (or is that because the "one-day miracle" is finally starting to be universally-recognized as a bear trap?).

[grania]

Nah, they'll be taking your saved money in the form of increased taxes to make up for their freespending ways now

Think positive...they can't take away accumulated money. They can tax the interest as much as they want, but that principal stays.

Here's a thought. People buy and hold stock when they feel confident and secure about the future. Catching Osama (which I really thought would've happened long ago), toppling Saddam, doing something about the ridiculous immigration situation, putting the corporate crooks in jail, discovering a way to solve the water or oil depletion problems are all examples of the kind of things that could cause a confidence in the future euphoria.

But, think about it. Many people have lost a large chunk of their retirement savings. They don't feel safe. A lot of formerly trusted groups (bosses, the Church, education) have let them down. Their jobs are in jeopardy, or many have had to accept lower paying ones. The government message is to "spend for the economy". I really think a lot of the spending and loss in the stock market is due to a perception of the future that isn't confident.

[Huck]

My thick skull is having trouble understanding the gist of your remark. Could you expand on it a bit? Are you saying that the pleasures of refinancing and 0% interest loans outweighs the pain of stock losses and layoffs, and that therefore the speech isn't necessary? Or that the effects of the refinancing will be stimulative and therefore the thing to do is just wait?

[rohry]

Think positive...they can't take away accumulated money. They can tax the interest as much as they want, but that principal stays.

Have you ever read "THE DEMOCRATS' (SECRET) PLAN FOR AMERICA" by Neal Boortz?

Here is an exerpt:

Tax your pension funds

This idea first received serious consideration in the early Clintonista years. As soon as the Republicans took control of the Congress the idea disappeared. Right now it’s being “secretly” incubated by Democrats to be hatched when they regain control. The idea is simple. There are trillions of dollars out there in various private pension and 401K plans. All of these trillions of dollars are earning interest for (gasp!) private investors and individuals and not for the government! To make matters worse – most of these private pension and 401K plans are owned by the evil, hated upper income earners.

The “secret” plan? A one-time 15% tax on the outstanding balance of all private pension and 401K retirement plans. This money would be paid into the general fund of the federal government and used to fund various social programs for low and middle-income earners.

Is this a dangerous plan for Democrats? Not really. The plan would take money chiefly from those who earn enough money to actually pay income taxes and contribute to pension plans. These people do not make up the core of Democratic voters.

Tax your pension contributions also

After the Democrats levy their 15% tax on the outstanding balance of all pension and 401K plans, they intend to follow up with a tax on all future contributions to these plans. The theory is that “rich” people shouldn’t be allowed to contribute that money to these plans tax free when “poor” people don’t have that opportunity.

For more go to: http://www.boortz.com/demsecrets.htm

[grania]

Rohry: I keep this archived to post whenever I see something horrible like that plan to tax 401K balances 15%

I'D LOVE TO CHANGE THE WORLD

Ten Years After Everywhere is freaks and hairies

Dykes and fairies, tell me where is sanity

Tax the rich, feed the poor

Till there are no rich no more

I'd love to change the world

But I don't know what to do

So I'll leave it up to you

Population keeps on breeding

Nation bleeding, still more feeding economy

Life is funny, skies are sunny

Bees make honey, who needs money, Monopoly

I'd love to change the world

But I don't know what to do

So I'll leave it up to you

World pollution, there's no solution

Institution, electrocution

Just black and white, rich or poor

Them and us, stop the war

I'd love to change the world

But I don't know what to do

So I'll leave it up to you

---------

Any plan like that would be truely the end of any semblence of our economic system. And the sad thing is, I could almost see people accepting something like that, if it didn't effect their pensions.

[rohry]

Ah yes, Ten Years After. England had a 95% top tax rate at the time, remember the Beatles' song "Tax Man?" The tax rate was almost enough to make those guys conservative. Not quite, however...they just decided to move out of the country.