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WELCOME - Vol. 7 No. 5
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." 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: February 2, 2002 Prior Week in Review: Financial Market Highlights: ============================ 02/01/02 01/25/02 %Change S&P 500 1,122.20 1,133.28 -.98% Dow Jones 9,907.26 9,840.08 +.68% NASD Comp 1,911.25 1,937.70 -1.37% Russell 2000 480.04 479.35 +.14% SOX Index 552.87 535.94 +3.16% Value Line 360.89 362.40 -.42% MS Growth 569.58 563.87 +1.01% MS Cyclical 537.92 529.75 +1.54% T - Bill 1.71% 1.68% +3 BP Long Bond 5.40% 5.48% -8 BP Gold - Oz-Near Month $286.80 $279.10 +$7.70 Silver - Oz-Near Month $4.31 $4.31 UNCH Economic News: ============== Lots Of Economic Reports Last Week - Consistent Message Economy Is Bottoming Out - If Not Recovering Already Remain Confident Of Recovery By Spring - Or Sooner *New Home Sales in December rose +5.7% - But November Revised modestly downward *December Durable Goods Orders rose +2.0% *January Consumer Confidence rose to 97.3 versus 94.6 *4th Qtr GDP rose +.2% - Huge Surprise - See Below *FOMC Leaves Rates Unchanged - No Surprise - But Leaves Downward Bias in place *Jobless Claims rose +30,000 to 390,000 - Four Week Moving Average fell -15,250 to 386,000 *Chicago Purchasing Mgrs' Index for January rose to 45.1 December was 41.5 - Nice gain *Personal Spending fell -.2% in December - Personal Income rose +.4% - Largest gain in a year *4th Qtr Employment Cost Index rose +.9% *Labor Department January Employment Report - Unemployment Rate fell -.2% to 5.6% - Nonfarm Payrolls fell -89,000 - Average Hourly Earnings unchanged at $14.59/hr - Average Workweek -.1/hr to 34.0 hours *Institute For Supply Management Index for January 49.9 Up from December's 48.2 *December Construction Spending rose +.2% *Univ. of Michigan Consumer Sentiment for January 93.0 - Up from December's 88.8 slight ease from midmonth 94.2 As long term subscribers know, we have been more upbeat than most in our economic outlook. Now the recession has disappeared and the Dow Jones Industrial Average has exceeded the Nikkei. What more could one ask for ? We had always believed that prior to September 11th a recession would have been avoided, but we were hoping that the Dow would exceed the Nikkei at "somewhat" higher levels. All kidding aside, though, last week was positive. To almost everyone's surprise, 4th Qtr GDP was positive, but barely so. So, for the record, at least until the revisions are released, 2001 GDP growth by quarter was +, +, -, +. That doesn't officially qualify as a recession, but there certainly was a profits recession, and that's what counts. Nonetheless, there is a message in the data. Specifically, if such a mild "recession" can cause such a severe erosion in corporate profits, the "flip-side" should be that leverage works both ways. In other words, as the economy recovers, profits could surprise on the upside, even as we believe overall economic growth will disappoint by "snapping back" less than consensus. Although the 4th qtr GDP number was driven by consumer spending, the personal income data imply that the consumer should not hunker down. The gain was the best since December of last year, and with auto companies already announcing deals, the price sensitive shopping trends should continue. The other noteworthy item in the GDP report was the huge drop in inventories, and yet overall GDP was still positive. With consumer spending likely to be maintained, it seems highly likely that the inventory correction is over, and that production will have to increase in the near future. In fact, some of the lead reports already imply that is the case - say the new orders component of the Chicago Purchasing Managers' Index. The Labor Department Report was also a positive surprise. However, at year end there are a lot of cross currents in the numbers so we wouldn't read too much into the decline in the unemployment rate. Nonetheless, it could have some psychological significance, and help maintain the more upbeat tone of consumer confidence. And finally, there is the Federal Open Market Committee (FOMC) and their decision to leave rates unchanged, but to maintain their bias toward lower rates. As you know, we expected the former, but thought they would remove the bias given the rise in consumer confidence and the three consecutive monthly gains in the leading indicators series. It appears that they are trying to micro manage expectations, as the bias is clearly not needed. My point is simply that Chairman Greenspan appears to be becoming increasingly sensitive to financial market reactions to the FRB's actions of any kind. He went out of his way to "correct" the negative impression, we would argue misinterpretation, of one of his speeches. Our view now is that he wanted to leave the bias in place to drive home his view, and ours, that the recovery will not be sharp. And, of course, at a subsequent meeting they can remove the bias, to reinforce perceptions of recovery. We think such an approach is a tad too cute, but probably harmless. Overall, we obviously continue to like the economic data. It supports our view of a recovery by Spring, if one hasn't already begun. Under such a scenario, earnings estimates should at least hold, taking pressure off the stock market. We'll see, but at the moment we like the risk/reward ratio. Current Weekly Calendar of Economic Data: ========================================= Monday: Tuesday: Factory Orders Wednesday: Thursday: Jobless Claims, Consumer Credit Friday: Wholesale Trade 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. Am. Int'l Group (AIG) $73.25 Automatic Data Proc. (ADP) $53.55 Fannie Mae (FNM) $81.40 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. 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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
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