Message-ID: <26624752.1075840994505.JavaMail.evans@thyme> Date: Sat, 5 Jan 2002 05:19:44 -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. 1 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 ========== ALERT: New Buy Sign from Dan Sullivan on 16 High-Return Stocks Buy signs from Dan Sullivan's The Chartist are few and far between. And on-the-money for 30+ years - if you buy what he buys. His 12/5/01 buy sign is a rare chance to join one of the country's premier stock pickers. FREE trial: http://www.investools.com/c/go/CHRT/SR-chrtTN2?s=S602 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." CLICK http://ibd.infostreet.com/cgi-bin/freeoffer.cgi?source=ALA1GE2 NO CREDIT CARD INFORMATION REQUIRED ============================================================ This is a text only copy that should be fairly well formatted for most e-mail programs. 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 5, 2002 Prior Week in Review: Financial Market Highlights: ============================ 01/04/02 12/28/01 %Change S&P 500 1,172.51 1,161.03 +.99% Dow Jones 10,250.74 10,136.99 +1.12% NASD Comp 2,059.38 1,987.26 +3.63% Russell 2000 499.30 493.62 +1.15% SOX Index 589.89 538.79 +9.48% Value Line 378.37 372.10 +1.69% MS Growth 562.43 568.96 -1.15% MS Cyclical 551.56 535.61 +2.98% T - Bill 1.68% 1.68% UNCH Long Bond 5.57% 5.54% +3 BP Gold - Oz-Near Month $279.20 $276.80 +$2.40 Silver - Oz-Near Month $4.65 $4.50 +$.15 Economic News: ============== Good Economic News Continues - Stock Market Responds Economic Recovery A Given - Slope Still In Doubt Modest Recovery Best Bet - Could Disappoint Some *Chicago Purchasing Managers' Index rose to 41.4 *Institute for Supply Management Index rose to 48.2 From November's 44.5 - See Below *November Construction Spending rose +.8% - Second Consecutive monthly gain *Jobless Claims rose +36,000 to 447,000 - Four Week Moving Average fell -3,500 to 409,750 *December Auto Sales eased to 16.5 million rate - Actual 2001 was 17.2 million - Second Best Year *Labor Department Employment Report - December - Unemployment Rate rose to 5.8% - Nonfarm payrolls fell -124,000 - Average Hourly Earnings rose +$.07/hr to $14.61/hr - Average Workweek rose +.1/hr to 34.2 hr. As longer term subscribers know, we have long been forecasting an economic recovery to be underway by Spring. Recent economic reports strongly support that outlook, and other market participants became converts last week, particularly given the strength in the Institute of Supply Management's Index (formerly known as the National Purchasing Managers' Index). And the stock market responded positively. For us, though, the issue is now the slope of the recovery, which has important market implications, at least in our opinion. Assuming no serious exogenous event, our best bet is for the resumption of modest economic growth, beginning with a slightly positive first quarter, and accelerating as the year progresses to somewhat over 3%. We would be pleased if that scenario plays out, but others won't, as they are expecting a faster recovery, and a stronger second half. And, the disappointment would likely fall hardest on those economically sensitive stocks which have been bid up most recently. Our rationale starts with the obvious - the recession, and we are assuming it is about over so we will use the past tense, was short and shallow. Short and shallow leaves less room for a "snap back" as consumer spending really did hold up very well last year. And, as you all know, the consumer drives approximately two thirds of economic activity. While it had appeared that the labor markets were improving nicely, and even though the latest Labor Department Report was better than expected, the recent softness in the jobless claims report implies that labor markets will not recover quickly. This is not terribly surprising, as the labor markets lag economic activity, but it does support our view that the early stages of recovery will likely be modest. Further out, the role of the Federal Reserve Open Market Committee (FOMC) becomes important. Their next meeting is at the end of the month, but given what we know now, it would be very unlikely to have a further rate cut. Best bet now is no change, and removal of the easing bias. But the real issue is how quickly they raise rates, given the unprecedented reduction over the past year. Recently there has been some dissension at the FOMC. Some members believe they have moved too far too fast, so they will be looking to "take back" some of the cuts quite quickly. Chairman Greenspan, though, will likely be more tolerant given his strongly held belief that productivity improvements are real, and sustainable. Complicating the issue still further, is that voting members have changed. At the moment, our view is that they will move fairly quickly to nudge rates slightly higher, to maintain their image as foes of inflation, particularly if the reported inflation numbers tick up, or productivity figures deteriorate. If we are right, that might bother the markets some, but the economic impact of moving rates up from such low levels should be minimal. The real problem would arise if the appearance was that a series of rate increases would push short rates above 3.5% - 4.0%. For now, not a concern. But, going forward, an issue. Simply put, inflation is bad, very bad, for financial assets. The latest year-over-year increase in average hourly earnings was +4.2%. But, that is at the end of a recession, so wage pressures will likely build. Hopefully Greenspan is right, and productivity can improve at a 3.5% - 4.0% rate, reducing the inflationary threat significantly. My intent is not to be alarmist as the stock market and economy recover. However, for the end of a recession, not only are wage pressures real, but stock market valuations, using the FRB's own model, at year end were slightly overvalued already. So, stay tuned as 2002 should be a very interesting year ! Current Weekly Calendar of Economic Data: ========================================= Monday: Tuesday: Factory Orders, Consumer Credit Wednesday: Thursday: Jobless Claims, Wholesale Trade Friday: Producer Price Index 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. American Int'l Group (AIG) $77.80 Fannie Mae (FNM) $78.45 Pfizer Inc. (PFE) $39.40 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. Hope this helps. ************************************************************** INDIVIDUAL MANAGEMENT FOR EVERYONE ================================== For everyone who has enjoyed reading our newsletter but has not had the $200,000 required for our personal, individual, asset management services, we have an incredible announcement to make: Green Mountain Asset Management Corp. and BridgePortfolio.com of Chicago, IL have created an alliance where you can now invest in the Green Mountain Asset Growth Portfolio through BridgePortfolio with a low minimum of $10,000. Your individual account will be set up at Schwab Institutional, which gives you 24 hr. web access. Green Mountain Asset, as a sub-advisor, will instruct BridgePortfolio what to buy and sell. BridgePortfolio.com, as your investment advisor, will execute trades on your behalf only in accordance with our instructions. Simple as that! Click here for more details. http://www.bridgeportfolio.com/index.asp?RelCode=GM4005VT Or call 800-610-8882 Monday thru Friday-9:00 am-5:00 pm CST ************************************************************** CLASSIFIED ADS ============== PARIS VACATION RENTALS - Apartment on Historic Ile Saint Louis Better Plan Ahead - Only One Month Left For 2002 http://www.paris-vacation-rental.com AT ANY COST:HOW AL GORE TRIED TO STEAL THE ELECTION - Only $19.56 http://www.amazon.com/exec/obidos/ASIN/0895262274/greenmountainass BIAS: A CBS INSIDER EXPOSES HOW THE MEDIA DISTORT THE NEWS -$19.56 http://www.amazon.com/exec/obidos/ASIN/0895261901/greenmountainass THE THEORY OF INVESTMENT VALUE - John Burr Williams - Only $29.95 http://www.amazon.com/exec/obidos/ASIN/087034126X/greenmountainass BASIC ECONOMICS: A CITIZEN'S GUIDE TO THE ECONOMY - Only $21.00 http://www.amazon.com/exec/obidos/ASIN/046508138x/greenmountainass ************************************************************** SURVEY ====== It would really help us if you would take our brief survey, so that we have a better understanding of our users and so that we can sell targeted advertising, which keeps our services free to you. A benefit to you and us. So, please take just two minutes to fill out a 13 question survey. There is no information requested to identify you personally as our only interest is in the aggregate data. Thank you very much for your help ! http://38.148.250.3/cgi-win/client.exe?readers,welcome,ad1321a,2000 To return here, after you have completed the survey, File Close works better than the method suggested at the survey site. ************************************************************** As we continue to build both our Newsletter and our Website, we welcome your feedback, so please feel free to e-mail me at: mailto:bobbose@stockresearch.com To UNSUBSCRIBE, just send an e-mail to: timely-invest-off@mail-list.com Be sure to use the e-mail address from which you subscribed. To SUBSCRIBE, just send an e-mail to: timely-invest-on@mail-list.com To CHANGE, put either your new or old e-mail address in the subject line and the other address in the from line and send to: timely-invest-change@mail-list.com DISCLAIMER: =========== The foregoing has been prepared solely for informational purposes and is not a solicitation, or an offer to buy or sell any security. It does not purport to be a complete description of the securities, markets, or developments referred to in the material. All expressions of opinion are subject to change without notice. The information is obtained from internal and external sources which we consider reliable but we have not independently verified such information and we do not guarantee that it is accurate or complete. We do not undertake to advise you to any changes in figures or our views. We, our employees, clients, and or officers and directors, may from time to time have a long or short position in the securities mentioned and may sell or buy such securities. -- Bob Bose Green Mtn. Asset Mgt. 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