Message-ID: <25126473.1075840978087.JavaMail.evans@thyme> Date: Sat, 26 Jan 2002 05:13:59 -0800 (PST) From: timely-invest@mail-list.com To: alewis@enron.com Subject: Weekly Economic Update Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: timely-invest@mail-list.com@ENRON X-To: alewis@enron.com X-cc: X-bcc: X-Folder: \ExMerge - Lewis, Andrew H.\Deleted Items X-Origin: LEWIS-A X-FileName: andy lewis 6-25-02.PST WELCOME - Vol. 7 No. 4 TIMELY INVESTMENT INFORMATION - Weekly Economic Update ====================================================== Welcome ! For new and old subscribers, there is an Archive Section on our website at: http://www.stockresearch.com/archive.html It lists the original copy of each of our research reports, at the time of publication. ============================================================= PLEASE SUPPORT OUR SPONSORS =========================== INVESTOOLS ========== Top Wall Street Watcher Ben Zacks: +51.7%/year 5-Year Gain! Moving with the best and brightest of Wall Street's big-money machines earned Ben Zacks a +51.7% five-year average annual gain. Start outperforming long-term. Get Zacks' latest 13- stock buylist with your FREE 30-day trial: http://www.investools.com/c/go/ZAKS/SR-zaksTB1?s=S600 INVESTOR'S BUSINESS DAILY - FREE TWO WEEK TRIAL OFFER ===================================================== FREE TWO WEEK TRIAL to America's Fastest Growing Newspaper and the FREE VIDEOTAPE "Maximizing Your Success." 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For those of you that would prefer an easier to read format, simply click on the link to our website, and if you want, print a copy. http://www.stockresearch.com/weekecon.html ============================================================ WEEKLY UPDATE FOR: January 26, 2002 Prior Week in Review: Financial Market Highlights: ============================ 01/25/02 01/18/02 %Change S&P 500 1,133.28 1,127.58 +.51% Dow Jones 9,840.08 9,771.85 +.70% NASD Comp 1,937.70 1,930.34 +.38% Russell 2000 479.35 474.37 +1.05% SOX Index 535.94 523.04 +2.47% Value Line 362.40 358.32 +1.14% MS Growth 563.87 558.74 +.92% MS Cyclical 529.75 510.81 +3.71% T - Bill 1.68% 1.58% +10 BP Long Bond 5.48% 5.37% +11 BP Gold - Oz-Near Month $279.10 $283.40 -$4.30 Silver - Oz-Near Month $4.31 $4.35 -$.04 Economic News: ============== Not Much News Last Week - What There Was Was Very Positive Also FRB Officials And Chairman Greenspan Now More Upbeat Best Bet - No Rate Cut - Removal Of Bias - Spring Recovery *December Leading Economic Indicators rose +1.2% - Subcomponents also solid *Jobless Claims fell -15,000 to 376,000 - Four Week Moving Average fell -8,750 to 404,250 *Existing Home Sales eased -.8% in December - Full Year, though, was a record and unsold inventory falls Regular readers should already know that we were quite happy with last week's reports. Not only were the economic reports very supportive of our long held outlook for a recovery to be underway by Spring, but we even had a few "powerful conversions" to our way of thinking - various members of the FRB and Chairman Greenspan himself. Let's hope they're right this time ! On Monday, when the markets were closed, various Federal Reserve Board (FRB) officials were reported by the Wall Street Journal to have downplayed the negativity of earlier remarks. Then on Thursday Chairman Greenspan, in Congressional testimony, noted " ... that some of the forces that have been restraining the economy over the past year are starting to diminish and that activity is beginning to firm." That's about a 180 degree turn, in a short period of time, from his "significant risks" remarks that we noted a few issues ago. It is not that his views of the economy have changed that much, at least in my opinion, as I think he was genuinely surprised at the interpretation of his remarks - as we were at the time. We actually thought his speech positive in terms of his comments on productivity growth. But, most market participants focused on the short term negatives not the long term positives. Chairman Greenspan's efforts on Thursday should help to redirect the focus. One other point worth noting is that he also tried to dampen the expectations for the recovery, as we have. Again during his Congressional testimony he noted that " ... although household spending should continue to trend up, the potential for significant acceleration in activity in this sector is more limited." Simply put, if the consumer sector doesn't "pop", and it drives two thirds of economic activity, then logically the recovery won't be too sharp. But, as we have pointed out before, such a scenario can be quite positive for financial assets. Last week's important actual reports, jobless claims and leading indicators, were both very positive. Leading indicators advanced for the third consecutive month, and importantly, at an accelera- ting rate. In addition, subcomponents were also supportive of an economic recovery beginning soon - if it is not already underway. The jobless claims report, although there were revisions to the prior week, was also quite good. Claims are again falling, but perhaps more importantly they are now at a level below September 11th. The clear implication is that the labor markets are stabilizing, a fact that will not be lost on the FOMC when they meet. Whereas last week we had noted that we didn't think another rate cut was necessary, but that the FOMC could take out an "insurance policy", it now seems quite likely that the FOMC is finished lowering rates for this cycle. In addition, while they may leave the bias toward lover rates in place, our best bet is that the bias is removed. Given the strength of the leading indicators, it would seem like tortured logic to try to argue that the "significant risks" that Chairman Greenspan discussed only two weeks ago actually exist. Clearly, then, our view hasn't changed - we still expect an economic recovery to be underway by Spring, and we expect the "bounceback" to be less than the consensus expects. We'll see if we're right soon enough. But if we are, the logical extension for market participants is that cyclical stories will disappoint. For now we're just happy enough having the FRB on our side as the long term implications are quite positive. Stay tuned ! Current Weekly Calendar of Economic Data: ========================================= Monday: New Home Sales Tuesday: Consumer Confidence, Durable Goods Orders, FOMC Meeting - 1 st Day Wednesday: FOMC Meeting - 2 nd Day, GDP 4th Qtr. Thursday: Jobless Claims, Personal Income/Spending, Chicago Purchasing Managers' Index, Employment Cost Index Friday: Labor Department Employment Report, Institute of Supply Management Index, Construction Spending. Fresh Money Buys: ================= In response to subscriber feedback, we have established this section to highlight recommendations from our list that we believe are the most attractively priced currently. We will limit the selections to three each week, even as our list of recommendations changes. Fannie Mae (FNM) $81.30 First Data Corp. (FDC) $81.14 Pfizer Inc. (PFE) $41.70 Original reports from the time of recommendation, are available on our Website at: http://www.stockresearch.com/archive.html You may obtain a "second opinion" from VectorVest, a service that provides limited access free so you may try their service at: http://www.stockresearch.com/vv.html We will not track the performance of this list as we are already monitoring the original recommendations. 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Corp., 139 Bank Street, Burlington, VT 05401 FREE Investment Newsletter - http://www.stockresearch.com FREE Trial Investor's Business Daily http://www.stockresearch.com/ibdform.html 800 - 385- 2673 / 802 - 658 - 7806 ---------------------------------------------------------------------------------- To subscribe, send a blank message to timely-invest-on@mail-list.com To unsubscribe, send a blank message to timely-invest-off@mail-list.com To change your email address, send a message to timely-invest-change@mail-list.com with the other address in the Subject: line This message was launched into cyberspace to alewis@enron.com