Market Review: Indian Summer Echo

"…there’s no question that unseasonably warm and dry weather fueled both residential construction and state and local public works," writes Morgan Stanley’s Richard Berner. "The temperature in January and February averaged 2.4 degrees or 7.3% warmer than the average of the past five years."

Here at the Daily Reckoning we’re always looking for reasons why the markets perform as they do. Today – on a bright and sunny day in Paris – the weather seems as good a reason as any.

Unseasonably warm temparatures in the winter months have boosted spirits to such a degree they prompted Easy Al, the money-lovers pal, to declare the recession dead and gone this week. And Treasury man O’Neill… well, he never thought there was one anyway.

"The rise [in] construction," continues the Morgan Stanley report, "will likely add about a percentage point to first- quarter growth…" Ned Davis Research claims the warm weather is responsible for the strong burst in retail sales so far this quarter.

With warm hearts and thoughts of cool spring breezes investors – no doubt eyeing the economic minutiae as closely as your editors do – pushed the Dow up 203 points to close at 10,572. The Nasdaq shot up 126… a whopping 7%… to close the week at (a prophetic) 1929.

Perhaps it’s true. Maybe, as the stock market seems to indicate, there’s a recovery in the making. But we wouldn’t count on it. As our friend John Mauldin points out "in the obtuse world of statistics, [seasonably adjusted] means that spring numbers, even if they were the same, would be weaker." And, as we’ve seen in the past, April can be the cruelest of months…

Hope you’re enjoying your pre-spring weekend,

Addison Wiggin,
The Daily Reckoning
March 9-10, 2002

p.s. As always, you’ll find this week in the Daily Reckoning below…

by Bill Bonner


"the Enron story is not a show that can be shut down forever… but one that reappears, like a Greek tragedy or sitcom plot, when the public is in the mood for it. Like sex itself, Congress may pass a law making it illegal – but it cannot make itunpopular."


"…there are hundreds, or even thousands of candidates. It is like trying to figure out who is the dumbest member of Congress… there are simply too many goodchoices…"

Guest Essay by John Mauldin

"…I am reminded of the observation that there is a statistical correlation between the length of skirts and the rise in the Dow. If there was such a correlation, then Argentina would be the world’s most valuable stockmarket…"

03/05/02 THE NEXT ENRON?

"…While the rest of the press and the politicians look for a tragic character flaw or lamentable regulatory gap, here at the Daily Reckoning we continue to search for the comicabsurdity…"

03/04/02 FAT TAILS

"…When you throw the dice…Whether you get snake eyes one time or a hundred times, the odds of rolling snake eyes the next time are the same. Dice have no memory…Investors do have memories but not muchimagination…"