Saturday, August 31, 2002

8/31/02 "It Was Very Difficult To Definitely Identify A Bubble Until After The Fact"

That's what Alan Greenspan said yesterday to a symposium of the Federal Reserve Bank of Kansas City in Jackson Hole, Wyoming. Maybe Greenspan might have inquired of the elk, moose, and buffalo wandering in Yellowstone. They might have had experience with bubbles in the many streams and rivers. In the end, markets characterized by supply and demand correct bubbles as well as recessions. The Fed reads the market's tea leaves. They make policy after the facts. The only certainty is the marketplace itself. The on-going bubble is the imagined halo formed around the Fed. I cannot say with certainty when that bubble will burst.

Friday, August 30, 2002

8/30/02 Posting #2 IT Spending

On a conference call last evening Sun Microsystems said the environment for technology spending may be worsening. The Sun executives are in the trenches and their orders are disappointing.


8/30/02 Housing

In prior blogs I have opined that the housing market has peaked at the bubble stage. There are many who disagree with me including the Fed's Greenspan. Clearly, corporate officials and board members of housing companies agree with me. In the latest quarter they were net sellers of about $260 million worth of stock in their own companies. It is the largest insider selling in housing stocks in 6 years. I consider the selling significant. These individuals should understand their business better than anyone. I wouldn't want to buck their selling. It reminds me of all the selling by insiders in the dotcom stocks at the height of that bubble. We must remember that policymakers like Greenspan aren't in the trenches.

Thursday, August 29, 2002

8/29/02 The GDP Report

Inventories grew at a $7.3 billion annual rate, revised upward from the previous estimate of a $1.0 billion pace and contributing strongly to the quarter's overall growth rate. That growth rate of just over 1% should indicate how weak the economy really is. An inventory build up will only mean markdowns in the coming months and lower corporate margins.

It's most unfortunate that politicians and the media feel a need to talk up the economy in the hopes of improving confidence. The stock market has been declining for over 2 years and the economy has been following in the same direction for months and months. There isn't a double dip- just one extended dip. Rallies in bear markets are still part of a bear market. The same is true with the economy. Rallies take place at lower levels for both.

Wednesday, August 28, 2002

8/28/02 September

First I want to apologize for some postings which are duplicate and triplicate in nature. I stink at technology!

Now for the real stuff. SEPTEMBER IS THE WORST MONTH FOR THE STOCK MARKET. In the last 50 years or so the market has been down 80% of the time in September. My suggestion- do nuthing. If you think you're smarter than the percentages, I can find a nice plot for you at Forest Lawn.

Tuesday, August 27, 2002

8/27/02 Posting #3 Consumer Confidence

The August number was 93.5 and this was much lower than expected. It is at the lowest level since November 2001. The consumer confidence number is much more vital than that of durable goods.
8/27/02 Posting #2 Congressional Budget Office

Today the CBO forecast cumulative surpluses of $336 billion from 2002 thru 2011, down from $1.7 trillion only 5 months ago and $5.6 trillion last year. This is rather incredible for an economy supposedly ramping up. They also projected a deficit of $145 billion for 2003, and that the budget would not be balanced until 2006. At election time I am certain you will be hearing these forecasts over and over again. One should remember the CBO is non-partisan.
8/27/02 Durable Goods

For the month of July durable goods rose approximately 9%(ex transportation 3.7%) and this reverses a very disappointing June. One must remember how volatile durable goods are from month to month and they are almost impossible to predict with accuracy. Without question the big mover behind the numbers is the 0 % financing for autos. Yesterday the big Dow stock was GM. Some folks must have been enthusiastic about the durable goods numbers to be announced today. Still, there is basically no hiring in the manufacturing sector. If there were, I'd get more excited. Additionally, Intel was unable to give any clue about potential IT pick up, and that is troubling but not surprising.
8/27/02 Durable Goods

For the month of July durable goods rose approximately 9%(ex transportation 3.7%) and this reverses a very disappointing June. One must remember how volatile durable goods are from month to month and they are almost impossible to predict with accuracy. Without question the big mover behind the numbers is the 0 % financing for autos. Yesterday the big Dow stock was GM. Some folks must have been enthusiastic about the durable goods numbers to be announced today. Still, there is basically no hiring in the manufacturing sector. If there were, I'd get more excited. In addition, Intel was unable to give any clue about potential IT pick up, and that is troubling but not surprising.
8/27/02 Durable Goods

For the month of July durable goods rose approximately 9%(ex transportation 3.7%) and this reverses a very disappointing June. One must remember how volatile durable goods are from month to month and they are almost impossible to predict with accuracy. Without question the big mover behind the numbers is the 0 % financing for autos. Yesterday the big Dow stock was GM. Some folks must have been enthusiastic about the durable goods numbers to be announced today. Still, there is basically no hiring in the manufacturing sector. If there were, I'd get more excited. In addition, Intel was unable to give any clue about potential IT pick up, and that is troubling but not surprising.

Monday, August 26, 2002

8/26/02 A Pimple On An Elephant's Ass

This week the media will make a big deal that in July $50 billion, the largest monthly amount on record, was pulled out of stock funds. We have about 60 billion households owning stock and bond funds, and $50 billion represents only about 1 1/2% of their total fund holdings. As such, redemptions potentially have a long way to go. Over the past two years the smart money has been selling. I have confidence in the public, and they are a lot smarter than most "smart" money managers. The $50 billion will prove to be a drop in the bucket or even a pimple on an elephant's ass.
8/26/02 A Pimple On An Elephant's Ass

This week the media will make a big deal that in July $50 billion, the largest monthly amount on record, was pulled out of stock funds. We have about 60 billion households owning stock and bond funds, and $50 billion represents only about 1 1/2% of their total fund holdings. As such, redemptions potentially have a long way to go. Over the past two years the smart money has been selling. I have confidence in the public, and they are a lot smarter than most "smart" money managers. The $50 billion will prove to be a drop in the bucket or even a pimple on an elephant's ass.

Sunday, August 25, 2002

8/25/02 Gram

My mother in law would have been 93 today. She died several years ago. Today will be a day of rest and remembrance
and reflection. It's difficult to lose and miss loved ones. Time is very precious and time is also an enemy that cannot be defeated.