Profit Warnings, Layoffs… And A Rising Market

06/02/01

“Profit warnings – and layoffs – are still a regular feature of the landscape…” reports the Daily Reckoning Blue Team, “but you wouldn’t know it if you watched the indexes. A global slowdown is underway… and all eyes are on the US consumer. Can Joe Six-Pack spend his way out of a global deflationary bust?”

The major indexes seem to think so… the Dow closed up 78 on Friday. Just the kind of response we’ve come to expect from a schizophrenic market pumped up on Fed-roids. Indeed, “there’s a lot of money sloshing around out there waiting to get into the market,” one analyst told USAToday.

Still the big blue missed regaining the mythical 11,000 closing the week off at 10,990. The Nasdaq end up Friday 38 to 2149 – but lost 101 – or four and a half percent. The S&P 500 gained nearly 5 to close the week down 17 points at 1260.

Markets Around The Globe: The Nikkei barely moved… the DAX in Germany rose a mite, the London FTSE 100 remained basically the same… and France, well… it dropped, but not by much.

The Russell 2000 finished the day up 5 to close the week at 501.

ADD’L PRICES FOR THE WEEK: Relative Stability… Dollar Still Strong.

Gold: $268

Crude Oil: $27.85

Natural Gas: $3.92

CRB Index: 210

Dollar Index: 118

The Sad, Sad Euro: $.84

British Pound: $1.42

Japanese Yen: $.84

The Blue Team Hotwire: Investment Intelligence Bulletins

Money.com reported Merrill’s tech strategist, Steve Milunovich as saying that “tech and telecom problems we’re experiencing might be more than a blip.” The problem? An obvious one for readers of the Daily Reckoning: capital spending bust.

“Capital spending and tech stock performance are closely correlated,” says Mulkunovich. “The likelihood is that the tech stock decline is foreshadowing a multiyear downturn in capital spending.”

Further, Mulkunovich also notes what Blue Teamers have known for a long time… that “‘old economy’ return on assets has at around 5 percent, calls into question whether all the spending on tech really has increased productivity.”

For investment advice consistent with the ideas and insights you read in The Daily Reckoning please enroll in the DR Blue Service:

The DR BLUE SERVICE

Addison Wiggin
Paris, France
June 02-03, 2001

Addison Wiggin

Addison Wiggin is the editorial director of The Daily Reckoning, and executive publisher of Agora Financial, an independent financial research firm based in Baltimore, Maryland. His second editions of international best-sellers Financial Reckoning Day Fallout and The New Empire of Debt, which he co-authored with Bill Bonner, were updated in 2009. His third book, The Demise of the Dollar… and Why it’s Even Better for Your Investments was updated in 2008, the same year he wrote I.O.U.S.A. Read more about Wiggin’s best-selling books here. 



Wiggin is the executive producer and co-writer of I.O.U.S.A. an acclaimed documentary nominated for the Grand Jury prize at the 2008 Sundance Film Festival and the 2009 Critics Choice Award and shortlisted for a 2009 Academy Award. 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. 

SPECIAL REPORT – The Endless PAYCHECK PORTFOLIO : In three simple steps, unleash a steady flow of work-free income… starting with up to 75 automatic “paychecks” deposited directly into your account.

View articles by Addison Wiggin

Other Daily Reckoning Articles:

• October 10, 2001 -- All Recessions Are Local
• September 10, 2002 -- The Great ‘GDP’ Hoax
• June 10, 2005 -- Hollow Dummies
• May 19, 2005 -- Dumb and Dumber
• December 30, 2006 -- 2006 – The Year in Review

 Print This Post