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 

[Always Right]

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.

ROTFLOL....I am still waiting for someone to put some serious money on that predtion. Short of a terrorist nuking the US, there is no way the DOW will go anywhere near that level.

[Always Right]

That one year chart showing gold outperforming the market is just too darn funny. Why doesn't the chart show how gold has performed vs. the market the past 25 years? It is just unbelieveable at how selective Puplava is on the stats he discusses.

[arete]

I am still waiting for someone to put some serious money on that predtion

I have serious money long PM's and short Wall Street's paper assets. I believe that there are a couple of other shorts that hang around here too.

Richard W.

[rohry]

"I am still waiting for someone to put some serious money on that predtion. Short of a terrorist nuking the US, there is no way the DOW will go anywhere near that level."

As I've already said to you, "We have all bet 'some serious money' on this market already."

We are not interested in your silly bets...

We all know that you are really smart, however...

Good luck to you...

[arete]

It is just unbelieveable at how selective Puplava is on the stats he discusses.

Just like the guys on Wall Street that show you long term charts in nominal terms. Add in inflation and see how the stock charts look.

Richard W.

[EVO X]

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

Bill had some face time on NBR tonight He wasn't pushing Dow 5000, but had a rather blah outlook on investing.

[Always Right]

We are not interested in your silly bets...

Just too funny! How long have you been making these silly predictions and when are they gonna happen? I've been holding my breath for over a year on all these sub-5000 DOW predictions. I am turning awefully blue....

[arete]

He wasn't pushing Dow 5000, but had a rather blah outlook on investing.

I thought that Gross himself looked tired -- like he's lost his edge and doesn't care. Just going through the motions.

Richard W.

[jwh_Denver]

*Why doesn't the chart show how gold has performed vs. the market the past 25 years?

Why? Who cares? Every poster on this board, including you, knows the answer to that question. Who invests anything on hindsight? Investors put their money in what they think is going to go up not in a stock that looked great a year ago.

[EVO X]

I thought that Gross himself looked tired -- like he's lost his edge and doesn't care. Just going through the motions.

Maybe he got stuck in traffic or has recently been on a cruise ship.

[RushingWater]

SOX had fallen 16 percent in three days

What is a SOX index?

[rohry]

"How long have you been making these silly predictions and when are they gonna happen"

I did not make any predictions. What are you talking about?

[arete]

or has recently been on a cruise ship.

Yeah, he definitely had that "no more cruises" look about him.

Richard W.

[meyer]

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

A bit off topic for this thread, but I'm not really all that fond of Carla. She seems to be a copycat, trying to merge and downsize just like the boys. Not necessarily the wrong thing, but I doubt she's doing it for the purpose of strengthening and growing the business. Rather, she's doing it because she wants to play with the boys. (To be fair, I don't think that many of "the boys" do the downsize/merger thing for the right reasons either.) Her purpose is to draw attention to herself so she can proclaim, "see, I can downsize and merge with the best of them. Hear me roar!"

As for the market, I predict some up days and some down days. I'm neutral at this level. Note that my conclusion isn't based on a great deal of research.

[meyer]

..."$3000-$3500"...

I hope you don't mean total value, in dollars, US. That would seem a bit low, even to a bear. :^)

[gabby hayes]

Political considerations alone guarantee that the PPT will use its considerable power to enhance the market as well as prevent precipitous decline. And surely powerful journalistic incentives exist to crack open this story. But what happens to the market if and when even partial details of active PPT intervention are revealed?

[dalereed]

I think we're headed into a world wide depression that will be worse than the last one, the one I grew up in. It might take a number of years of drops and short small rallys but before it's all over the $3000-3500 area is where I see the market start to rebound and the country rebuild itself.

The fed could flood the market with paper and cause inflation like they did durring the Carter years but if they do, the crash will be just that much worse.

[meyer]

I think we're headed into a world wide depression that will be worse than the last one, the one I grew up in. It might take a number of years of drops and short small rallys but before it's all over the $3000-3500 area is where I see the market start to rebound and the country rebuild itself.

The fed could flood the market with paper and cause inflation like they did durring the Carter years but if they do, the crash will be just that much worse.

Ha! You threw me off with that dollar sign! :) I saw the $ and though of total market value, not the DOW figure. Imagine the total value of all stock held being $3500.

I still don't see the DOW getting that low, but then I didn't see it hitting 11,700 either. IMHO, of course.

[TigerLikesRooster]

Re #33

I have never been on cruise ship. What makes people get so tired after they have been on a cruise ? Being on cruise ship is worse than being on a economy class in a transpacific flight ?

By the way, don't go on a cruise for quite a while. That is a really good "soft target" for Al Qaeda types. A big lumbering undefended ship full of thousands of folks in the middle of an ocean.

[patriot5186]

maybe the fund managers are just padding their statistics for those glossy mailers for next year by injecting funds?
We'll see after December.