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.”
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Addison Wiggin
Paris, France
June 02-03, 2001
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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