Wednesday, 12/4, Market WrapUp (It is a good time to buy! Really?)

Financial Sense Online ^ | 12/4/2002 | James J. Puplava

[rohry]

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Today's Market WrapUp by Jim Puplava 12.04.2002 Back to Market Monitor Commentary Mon  Tue  Wed  Thu  Fri

A Pictorial Walk Through Today's Financial Jungle

We can separate today’s news into four separate categories. The headlines will speak for themselves:

Earnings Warnings/Bankruptcies/Economy

• Ford, GM discount their way to higher sales-lower profits

• Federated & Office Depot Expect Holiday sales to fall

• Burger King Operator files for bankruptcy

• HP reduces sales growth estimate

• Disney cuts earnings-2003 estimates in doubt\

• R.J. Reynolds to cut 635 jobs, shed two units to cut costs

• Gateway sees 2002 sales on low end of forecast

• J.P. Morgan to halve funding for private LP’s to stem losses

• IBM to contribute $3 billion to pension plan to close gap of $4.5 Billion. Company has not contributed to plan since 1995.

• AMR to cut 1,100 Flight attendant jobs to shore up bottom line

• US car Sales Continue to Fall

• Service Sector Expands

• UAL Doesn't get funding, airlines will file bankruptcy

Scandals

• Goldman, Citigroup, Morgan Stanley, U.S. Piper Jaffray, Deutsche bank fined $8.25 million each for destroying e-mails & backup sought by regulators

• Banks fear legal liabilities from investigation by authorities into conflicts of interest

• Cigna Corp. accused of corruption

• Former El Paso official charged with false reporting of natural gas trades.

• SEC set to vote on making mutual funds disclose holdings every three months

• China, India, & Cuba seek WTO rules to make foreign investors accountable

• Analysts drop Q4 pro forma profits to 15% from 20% versus the start of the quarter. Q1 2003 estimates drop from 17% to 12%

• SEC investigating Disney on disclosure of independent directors whose relatives have ties with the company

Investment Markets

• Pimco’s Bill Gross Says Fixed-Income Bull market Over (see bond market graph)

• Merrill Lynch Strategist Sees Danger Ahead

• Analysts drop Q4 pro forma estimates from 20% at beginning of the quarter to 15%. Trim Q1 2003 pro formas down to 12% from 17%

Geopolitical Risks

• North Korea Rejects UN call to halt Development of Nuclear Arms

• US War Game—US continues Middle East Buildup

• US Military sees cities as the new battlefield of the 21^st century

• Hezbollah calls for worldwide attacks-to merge strategy with al Qaeda

• Iraq calls Inspectors spies-steps up missile firing against US planes

• Israeli Forces Strike Terror Suspects-Kills master bomb maker

• Bali bombing suspect with links to al-Qaeda arrested

• Iraq moves anti-aircraft assets to civilian sector

• Congress considering sending troops to police Jordan River

• Kabul forming army of 70,000 to replace warlords-third assassination attempt on Karzai.

• East Timor under curfew to control rioting in capital

• Anti-Chavez protest spread throughout Venezuela-Country on edge of chaos

Now look at the following charts from today's action --

I believe these headlines and charts eloquently express what I would comment on today. You, of course, must draw your own conclusions.

Is this the beginning of a new bull market as Wall Street and the financial media are telling investors? Or is this an artificially stimulated rally born out of hype, hope, and hyperbole?

One giddy cable news reporter seemed clueless as to why the SOX had fallen 16 percent in three days. She had called Wall Street traders who told her they couldn’t figure why the SOX had fallen, but commented with, “It is a good time to buy.” Need I say anything else today?

Volume on the NYSE came in at 1.53 billion with market breadth negative by a 3-2 margin. The VIX rose .38 to 32.14 and the VXN advanced 1.56 to 53.55.

Copyright © 2002 Jim Puplava
December 4, 2002

Charts courtesy of Bloomberg 

[rohry]

New format tonight...

Methinks Jim has to do his Christmas shopping tonight...

[rohry]

Market WrapUp is delivered...

[arete]

“It is a good time to buy.” Need I say anything else today?

Yep, that about sums it up alright.

Richard W.

[RightWhale]

“It is a good time to buy.”

Might be a good time to buy a good, warm coat and pair of bad weather boots. Something that will last.

[tubebender]

What do you think Puplava is doing to make money if he is not in the market. There must be some investors making sound buys as I see many stocks up 30 to 40% from July.

[HighWheeler]

The stock market and economy are balking and hinging on one thing, the war with Iraq.

Unlike the last time when we kicked his ass up and down the fertile crescent, saddam has the potential to do some WMD damage. We can thank XXX42 for not staying awake on his watch.

In my opinion, saddam has some dirt on XXX42, and used that to blackmail our first black president. I don't know what it is, but if a fat assed pug like Monica can wind up fiddling with XXX42 in under 2 hours after they first met by simply showing her huge ass in a thong, then saddam would have no trouble sending in a highly successful spy to create an even worse situation to use for blackmail.

[dalereed]

“It is a good time to buy.”

Sure is, anything but stocks!

[rohry]

"I see many stocks up 30 to 40% from July."

Maybe you could share your recommendations with us? I know of another Freeper who shorted 4 stocks today and they all went down 5 or 6%...

[rohry]

"What do you think Puplava is doing to make money if he is not in the market."

Lower highs and lower lows don't make a bull market. It equals a bear market...Read his articles, they tell you where to invest...

[arete]

Sure is, anything but stocks!

Heard Bill Gross today on CNBC. He said that bonds are fully valued. Stated that stocks are overvalued and could still fall to 5000 on the Dow, but he didn't sound as sure of that as privously. He also said that he thought (and this is the surprise) the FED would be successful in reinflating the economy. No deflation. He didn't mention PM's.

It was a stunner and goes against everything I'm seeing in the economy. Wonder what Gross knows and how he knows it.

Richard W.

[steveegg]

“It is a good time to buy.” Need I say anything else today?

Is that anything like the Klingon "It's a good day to die."? Seriously, I'd be shopping for self-preservation items.

[rohry]

"Heard Bill Gross today on CNBC...

bonds are fully valued...

stocks are overvalued and could still fall to 5000 on the Dow...

He also said that he thought (and this is the surprise) the FED would be successful in reinflating the economy."

I think he's right about everything but the last prediction...

[Mr. Jeeves]

Maybe someone high up gave Gross the Scott Ritter treatment...

I guess now we know how far the Fed will go to save JP Morgan - all the way.

[Always Right]

stocks are overvalued and could still fall to 5000 on the Dow

Pure lunacy....

[rohry]

"Pure lunacy...."

So, now Bill Gross is a lunatic?

[Always Right]

So, now Bill Gross is a lunatic?

Don't know, but his prediction is pretty looney.

[arete]

Maybe someone high up gave Gross the Scott Ritter treatment...

I starting to wonder about some or the strange and unexplained changes in position recently. I have to think that some of these guys took a close look at what was going to happen if/when the FED failed, that they were horrified and are now jumping on board the Greenspan spin machine trying to convince everyone that (repeat this 10 times) "there is no deflation risk".

Off subject slightly, and I don't want anyone to respond to this -- Christopher Hitchens was on C-Span the other day supporting a war with Iraq. Talk about people taking odd positions. His only explanation was that, it was about oil and what better reason to go to war.

Things sure are getting interesting.

Richard W.

[arete]

Don't know, but his prediction is pretty looney.

It is only looney to think that 5000 will be the bottom. Of course by then, no one is really going to be paying attention.

Richard W.

[dalereed]

I'll still hold to my prediction of $3000-$3500 for the dow to bottom out.

[razorback-bert]

HP reduces sales growth estimate

Just last week, TIME had a puff piece on Carla and well she was doing.