05/26/01 The Daily Reckoning
Weekend Edition
May 26-27, 2001
Waterloo, New Hampshire
By Addison Wiggin
MARKET REVIEW: End Of The Rally?
Revised GDP numbers for the first quarter suggest the economy is not making a sexy “V” recovery, but more of a sagging U, without the upside…
On the news Friday, the Dow fell 117 – a weekly loss of 296. The Nasdaq shed 30 to close at 2251. The S&P 500 lost ground Friday – down 15 to 1277, ending the week down an equal amount.
ADD’L PRICES FOR THE WEEK: Gold Retrenches…commodities fall back
Gold: $278
Crude Oil: $28.38
Natural Gas: $3.97
CRB Index: 212
Dollar Index: 118
The Sad, Sad Euro: $.85 – down 2 cents
British Pound: $1.42
Japanese Yen: $.83
BLUE TEAM HOTWIRE – Investor’s Intelligence Bulletins From Around The World
Evidence Of The Sucker’s Rally
What is seen: despite its 296-point loss for the week, the Dow has risen 17% from its March 12 low of 9389. The Nasdaq is up 37% from its 2001 low of 1638 set on April 4. The S&P 500, has added a healthy 15% since its April 4 low of 1103.
What is unseen: Corporate profits have dropped two quarters in a row. First-quarter 2001 after-tax profits fell over 3% in the first quarter. They fell 4.3% in the fourth quarter.
Even worse, business investment is falling too. Business investment fell 2.6% in the first quarter. It fell 3.3% annually in the fourth quarter. Those are the first back- to-back declines since, you guessed it, the recession 1990- 1991. Investment is what creates profits. And without new investment profits will continue to fall.
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Addison Wiggin
Addison Wiggin is the executive publisher of Agora Financial, LLC, a fiercely independent economic forecasting and financial research firm. He’s the creator and editorial director of Agora Financial’s daily 5 Min. Forecast and editorial director of The Daily Reckoning. Wiggin is the founder of Agora Entertainment, executive producer and co-writer of I.O.U.S.A., which was nominated for the Grand Jury Prize at the 2008 Sundance Film Festival, the 2009 Critics Choice Award for Best Documentary Feature, and was also shortlisted for a 2009 Academy Award. He is the author of the companion book of the film I.O.U.S.A.and his second edition of The Demise of the Dollar… and Why it’s Even Better for Your Investments was just fully revised and updated. Wiggin is a three-time New York Times best-selling author whose work has been recognized by The New York Times Magazine, The Economist, Worth, The New York Times, The Washington Post as well as major network news programs. He also co-authored international bestsellers Financial Reckoning Day and Empire of Debt with Bill Bonner.
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