Message-ID: <4913919.1075852349345.JavaMail.evans@thyme> Date: Mon, 17 Sep 2001 06:30:25 -0700 (PDT) From: michael.l.matthews@rssmb.com To: whalley@enron.com Subject: FW: World Trade Center Tragedy Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Matthews, Michael L [PVTC] X-To: 'Greg Whalley' X-cc: X-bcc: X-Folder: \GWHALLE (Non-Privileged)\Inbox X-Origin: WHALLEY-G X-FileName: GWHALLE (Non-Privileged).pst Greg- Hope you and your family and friends are safe. Thought you might find the attached of interest. Michael Matthews Salomon Smith Barney First Vice President- Investments Portfolio Manager 1661 International Drive Suite 200 Memphis, TN 38120 (901)818-4224 (800)227-4146 > Words cannot begin to describe our feelings at this moment or our concern > for the safety of so many of our friends and colleagues placed at risk in > the recent terrorist attacks. We know that all of our thoughts, hopes and > prayers go out to all the victims and their families. > > At this time we are cautiously relieved to hear that there have been no > reported injuries to Citigroup employees. > > As you may have seen in media reports, our facilities located at Seven > World Trade Center were destroyed. We have been told by Citigroup Asset > Management senior management that pre-existing business continuation plans > for offices located in lower Manhattan have been put in place. They > expect to resume operations as the exchanges and markets re-open. > Displaced staff has already been relocated to designated Citigroup offices > in mid-town Manhattan, New Jersey and Connecticut. > > Please rest assured that your assets are safe and that they will be > properly and continuously managed by the portfolio managers of Smith > Barney Asset Management and Salomon Brothers Asset Management. > > The days ahead for all of us will be difficult. Please feel free to call > us with any questions you may have. As always, we appreciate the > opportunity to be of service to you. > > Best Regards, > > Jerrold Graber Michael Matthews > Scott Notowich > Sr. Vice Pres-Investments 1st Vice Pres-Investments 1st Vice > Pres-Investments > Financial Consultant Financial Consultant Financial > Consultant > > We thought you would be interested in seeing Equity Strategist view for > the markets: > > As we await the re-opening of the U.S. equity markets it seems to be > a good time to reflect on some of the fundamental and technical issues we > will have to confront in the weeks ahead. To say that the future is > unclear is to state the obvious. We must examine the information > currently available, make suppositions about the likelihood of future > events and structure our portfolios in a way most likely to exploit short > term market inefficiencies and take advantage of our long term strategic > views. > To us, there are at least five issues which will influence the > course of the economy and markets in the time ahead. The effects of > global liquidity, consumer confidence and energy prices should determine a > great deal of the equity market's direction and internal dynamics. In > addition, the fundamental and market performance of the Technology and > Financial sectors should have an impact beyond their normal sphere of > influence. > > 1. Global Liquidity: We believe that the Government will try to make > individuals and institutions as whole as possible. Clearly, Washington > does not want a financial panic to exacerbate the physical damage already > done. We believe that the Federal Reserve will effectively make unlimited > liquidity available to the system, as they have done during prior crises. > Additionally, the Executive and Legislative branches appear ready to > provide fiscal assistance as needed. We should assume that the Government > will behave rationally and apply the techniques used successfully in the > past. These actions would tend to be supportive to the markets. While > the European Central Bank has stated that no easing is imminent, they > obviously are ready to inject liquidity on an "as-needed" basis. > > 2. Consumer Confidence: Clearly the Consumer will be negatively impacted > in the short run by recent events. Obviously air travel and lodging will > feel an immediate impact. However, the key questions are: how much will > the consumer be effected and for how long? We note that following the > "Crash" of 1987, Wall Street predicted a dramatic consumer slowdown which > did not materialize. We do not intend to draw direct analogies to 1987 > but would merely point out that predictions of Consumer collapse have > proved to be unreliable. While some slowdown will inevitably result from > the catastrophe, one must remain aware of the Consumer's inherent > resilience and the potential offset of the fiscal and monetary stimulus > discussed above. > While we do not wish to minimize this potential problem, we believe that > it must be viewed in a broader historical context. > > 3. Oil Prices: Early indications are that responsible oil producing > nations will not move to seriously curtail production or shipments. > While nothing can be ruled out, it is hard to say that the perceived risk > to world-wide oil supplies will necessarily result in higher oil prices. > This is important. The absence of a price spike would significantly > differentiate today from the 1990 precedent. Then, the risk of inflation > affected the Fed's ability to rapidly lower rates and offset the price > rises. In 1990, higher energy prices undoubtedly contributed to the > subsequent recession; and the Fed's decision not to immediately cut rates > adversely impacted the Consumer. We must indeed ask ourselves if the risk > to the world's oil supplies is significantly greater today than it was a > week ago? > > 4. Technology and Communication Services: Surprisingly, Technology was > one of the better performing areas in the European markets in the days > immediately after the tragedy. While one does not want to read too much > into this, a logical progression of events could help the group's > fundamentals in the months ahead. Initially, much of the infrastructure > damage done will have to be undone. After any disaster, the first > response is to replace or repair that which has been damaged. This could > provide a short-term boost in spending. Longer-term, there will likely be > a need for increased spending on bandwidth, back-up (recovery) systems, > storage and communications systems. In recent months, many corporations > have deferred technology expenditures. This week's events may accelerate > the resumption of meaningful technology spending, lending a much needed > boost to the group. > > > 5.Financials: Financial Services companies are obviously adversely > affected by recent developments. Existing concerns have been heightened > by these events. Insurers face the potential of massive claims. Banks > and brokers face potential credit concerns and the impact of distracted > capital markets. However, as mentioned earlier, we anticipate that the > Fed will be injecting needed liquidity. It would be rare indeed for > Financials to fare poorly while such an easing is underway. A healthy > financial system is essential to our country as well as the world. > Investors, while recognizing the damage done, should also be aware of the > potential benefits of impending remedies. > > > <<...OLE_Obj...>> > Michael Matthews > Salomon Smith Barney > First Vice President- Investments > Portfolio Manager > 1661 International Drive > Suite 200 > Memphis, TN 38120 > (901)818-4224 (800)227-4146 > -------------------------------------------------------------- Reminder: E-mail sent through the Internet is not secure. Do not use e-mail to send us confidential information such as credit card numbers, changes of address, PIN numbers, passwords, or other important information. Do not e-mail orders to buy or sell securities, transfer funds, or send time sensitive instructions. We will not accept such orders or instructions. This e-mail is not an official trade confirmation for transactions executed for your account. 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