Stop The Presses!

The Daily Reckoning

Weekend Edition

May 19-20, 2001

Waterloo, New Hampshire

By Addison Wiggin

MARKET REVIEW: Stop The Presses!

The market Friday paid little attention to a Commerce Dept. indicating consumers had driven the trade deficit up a record $31.2 billion, preferring to rest easy following its Fed-inspired Wednesday run up of 343 points.

The Dow closed slightly higher – up 53 to 11,301. The `blue’ chip index enjoyed a whopping 480-point gain for the week – closing at its highest point since September 6th. The S&P 500 gained 3 to close at 1291 – up 46 for the week. The Nasdaq shimmied up 5 on Friday 2198, a total gain of 91 for the week.

Running the printing presses full tilt appears to be just the method Mr. Greenspan prefers for engineering the fabled `soft landing’ for the US economy. On Wednesday, according Bill King, Easy Al and company goosed the money supply by $11 Billion – M3 growth has escalated to nearly 14% for the past 13 weeks… M2 is up +12%. Annualized that’s in excess of 20%.

“While Alan Greenspan thinks he’s averting a recession,” said Jim Bianco, of Bianco Research, “He may be causing a depression.” Inflation is already rearing its ugly head – CPI rose 3% in April. Gold reacted strongly, rocketing up $13 dollars in the final 3 hours of trading Friday.

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Markets Around The Globe: Japan slipped 0.2%. Germany, Britain,  and France all rose slightly.

The Russell 2000 rose to 506, ending the week up 18.

ADD’L PRICES FOR THE WEEK: Runaway Bull In Gold?

Gold: $287 – up $13 in the last 3 hours of trading Friday

Crude Oil: $30.34

Natural Gas: $4.29

CRB Index: 218

Dollar Index: 116

The Sad, Sad Euro: $.87

British Pound: $1.43

Japanese Yen: $.81