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Friday, 5/3, Market WrapUp
Financial Sense Online ^
| 05/03/02
| Jim Pulava
Posted on 05/03/2002 4:09:07 PM PDT by TigerLikesRooster
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Weekday Commentary from Jim Puplava
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Friday's Stock Market WrapUp I?m thinking about the well-coined phrase thrown around the financial markets these days. "What is the Smart Money doing versus the Dumb Money?" The implied representation of these two items is that the "Smart Money" is considered the institutions and insiders, while the "Dumb Money" refers to the individual investors. Today, in a report released by BCA Research in Montreal, insider buying and selling turned sharply negative last month. This report lends a view into what many analysts had feared for several weeks: the concern that many executives, particularly in the tech sector, are pessimistic about the economy?s strength and the future potential of their companies. Are these executives selling their shares in anticipation of a market retreat? Not according to the ones who are selling. Most executives, when asked, explain that the reason for selling was due to other factors. For instance, the need to cover a large tax bill from exercising options or because of the limitations as to when they are allowed to sell created a coincidence to the timing of the sale. However, in industries with a brighter outlook, you?ll find that insiders have been buying where the outlook is more positive. For example, there has been some very lucrative insider trades of late in the metals and mining stocks. Simply put, insiders are the smart one?s in this game and they buy and risk their personal capital when things are good. Long before the tough economic times of today, insider selling and buying was looked at as a very strong indication of what the companies? future held. But with today?s increasing emphasis on stock and stock option compensation packages, the pundits claim it has become ever so difficult to get read on the true meaning of an insider purchase or sale. I?d venture a guess that the meaning is still the same today as it was 10 years ago. In the financial markets this week, the Dow showed some strength on Tuesday and Wednesday but failed to hold those gains as the week wore on. For the week the Dow gained 1%. The NASDAQ continued to be the worst performer of the group as Microsoft and Intel weighed down the index, and finishing the week with a 3.1% loss, bringing its decline for the year to 17%. The worse-than-expected unemployment rate and slower-than-expected growth in service industries cast doubt on the strength of rebound in profits. The U.S. unemployment rate rose in April to 6%, the highest since 1994. The increase was accounted by the number of "new" people entering the workforce. Separately, an industry survey showed activity at retail, financial services and other non-manufacturing companies rose at a slower pace in April than March, signaling a weaker than forecast recovery from recession. Overseas Market
European stocks fell, led by Nokia Oyj, Vodafone Group and Royal Philips Electronics, after the U.S. government reported the highest unemployment rate since 1994 and the world's largest economy created fewer jobs than expected. The Dow Jones Stoxx 50 Index dropped 30.28 points, or 0.9% to 3466.61, erasing an earlier gain of as much as 0.9%. Declines this week in Vodafone, Nokia, Philips, Deutsche Telekom, Telefonica SA and BT Group dragged the index down 0.9%. Singapore's benchmark stock index gained for a third day after the government raised the city-state's 2002 growth forecast and said it is cutting income and corporate taxes. Hong Kong's Hang Seng Index rose 0.2% led by Citic Pacific Ltd. after Merrill Lynch & Co. upgraded its rating on the stock. Treasury Market
Government bonds perked up as the day's weak data assured that the Fed will sit on the sidelines until at least the end of June. The 10-year Treasury note gained 10/32 to yield 5.055% while the 30-year government bond rose 22/32 to yield 5.535%. © Copyright, Scott Middleton, May 3, 2002 Home l Broadcast l Storm Watch l Top 10 l Perspectives l Resource Center l Sitemap l About Us Archived WrapUps: Warning: Earnings l Pro Forma Economics
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TOPICS: Business/Economy; Editorial
KEYWORDS: econmy; investment; stockmarket
To: TigerLikesRooster
The US dollar is losing its value all over the world and gold is really coming on strong.Somehow our government isn't really telling folks the facts.Use common sense with your investments.Realestate and gold are as safe as it gets.
2
posted on
05/03/2002 4:53:28 PM PDT
by
taxtruth
To: taxtruth
The US dollar is losing its value all over the world and gold is really coming on strong.Somehow our government isn't really telling folks the facts.Use common sense with your investments.Realestate and gold are as safe as it gets. I was watching NBR tonight. The guest was a total bear. He didn't like anything other than oil stocks and some defense industry stocks. His last comments were "Cash is King"
3
posted on
05/03/2002 5:33:18 PM PDT
by
EVO X
To: sinkspur;bvw;Tauzero;robnoel;kezekiel;ChadGore;Harley - Mississippi;Dukie;Matchett-PI;Moonman62...
Thanks to Tiger for posting Market WrapUp tonight while the wife and I went to Myrtle Beach...Wife isn't happy, AC broke in the 928. We both sweated like Al Gore in his Florida speech...
4
posted on
05/03/2002 5:57:10 PM PDT
by
rohry
To: TigerLikesRooster
I've been very, very bearish for a long time now. It's good to see some reality creep into these markets. When the average P/E is something like 40 to 1 using pro-forma earnings, you know something is wrong.
I'd like to share this little tidbit from todays report at www.comstockfunds.com - "Every day, it seems, we get more evidence that the so-called economic recovery is faltering. April employment was up 43,000, but the March number, originally reported as up 58,000, was revised downward to minus 21,000, a swing of 79,000. Similarly, the February figure, initially reported as plus 66,000, now stands at minus 4,000. With substantial downward revisions such as these, the current release showing a turn toward growth must be taken with a grain of salt."
Has anyone else noticed the fact that these unemployment numbers get announced with trumpets and fanfare when they are first released, and then when the revised numbers come out they are buried on page 47, under the ads for dry cleaning? Is anybody buying this anymore?
Anyway, I've been out of stocks for over a year now (except for some short positions) and I'm entirely in cash and real estate now (house is paid for). The big question is do I buy some gold now or wait a week or two for a possible momentary dip in prices? As far as this market is concerned, I'll go long again when P/E ratios matter again. The current multiples are just silly.
To: taxtruth
Realestate will not be a good spot for most. Most of the debt runup by everyone has either been through the use of the credit card or refinancing of their mortgagees or pulling out more equity out of their homes(2nd mortgage). Just this week the 3 top banks have pulled back on their lending practices to the sharpest decline in over 30 years. To top things off, the average consumer is spending about 109% of what they earn. Banks carry about $7.8 trillion worth of mortgagees on their balance sheet. Given this info, it is only a matter of time before the debt implosion takes place since the only thing keeping this economy going is debt spending. Sooner or later people will say enough is enough, then it will begin to hit.
All of this will take time however, and even this depends on what happens over seas. If foreign investors get to nervous and start to pull out because the dollar drops too low or worries over a debt spending hit home, then what? Who will cover the debt after the pull out? It will get ugly to say the least. Then there is the matter of the derivatives market held by the banks(about $50 Trillion, real exposer may only be 5-10 trillion but that still is a lot of money).
If this had the possibility to blow up on your watch(current gov.), would you simply let it happen or fight it(which will only make things worse)? Either case, it is a no win situation for them so they will simply fight it.
To: Billy_bob_bob
Has anyone else noticed the fact that these unemployment numbers get announced with trumpets and fanfare when they are first released, and then when the revised numbers come out they are buried on page 47, under the ads for dry cleaning? Someone here (I think it was Wyatt's Torch) predicted that those numbers were wrong and would be revised...
7
posted on
05/03/2002 6:22:52 PM PDT
by
rohry
To: Billy_bob_bob
The big question is do I buy some gold now or wait a week or two for a possible momentary dip in prices? The Elliot Wave people claim gold will go to $250. I don't buy it. I'd get a position in gold now (I bought at $265) and add to it on the dips (if there are any).
The gold pros say that gold will move $25-$50 a day when the shorts positions blow up...
8
posted on
05/03/2002 6:35:06 PM PDT
by
rohry
To: Billy_bob_bob
April employment was up 43,000, Could this be caused by the extension of unemployment "benefits" ? How many had exhausted theirs and have reapplied ?
To: taxtruth
People have been saying for 2 years that it will be all over when the dollar falls. We saw some significant downward movement in the US$ this week. Gold pushing up. Naz grinding lower. My gut tells me we are close to a break.
billy_bob_bob: If you believe we are at the beginning of a major gold bull, I'd buy now. There is no guarantee there will be a dip.
10
posted on
05/03/2002 6:50:25 PM PDT
by
Soren
To: Billy_bob_bob
"The big question is do I buy some gold now or wait a week or two for a possible momentary dip in prices?"
If you are a gold speculator and intend to actively trade your position, hold off. Otherwise go ahead and buy now.
If it closes above $320 I'll jump in, and hold for a while. But I agree with the EWI guys and think in the short term it will go back down below $250. For a horizon of a year or more though, buying gold now is hardly a bad decision.
11
posted on
05/03/2002 7:37:34 PM PDT
by
Tauzero
To: Billy_bob_bob; rohry
EWI says this this about gold this month:
"The swell of bullishness toward gold has spilled into the mainstream. 'Gold's Got the Touch Again,' says The New York Times. 'Goldbugs Rejoice!' proclaims the Financial Times. 'Take a shine to gold,' urges a financial columnist. The 10-day Daily Sentiment Index of gold traders has pushed to 73.9% bulls, a level commensurate with previous market highs. One group that is not bullish on gold is the smart-money commercial hedgers, who now hold their largest net short position (-72,703 contracts) since the yellow metal was at $418 in February 1996 (-98,449 contracts.) So the smart-money has been selling into this rally. This should turn out to be a sound decision, as the Elliott wave pattern from the February 16 low ($253.50) retains a clearly corrective look. Wave (2) should be contained by resistance of $320-$325. Wave (3) down should carry gold below $250. The alternate count allows for a sharp spike to about $350."
It's the media coverage that tips the scales for me in favor of EWI.
The dollar wave count is much clearer to me, and points to at least one more rise before the dollar dies. While a rise in the dollar doesn't necessarily mean a drop in gold, it doesn't help the near-term gold bull argument. And ISI's liquidity index (M3 + commericial paper) has gone negative, which means actual deflation, not just disinflation.
12
posted on
05/03/2002 8:18:12 PM PDT
by
Tauzero
To: Tauzero
The pattern I've been seeing lately would suggest that there is going to be a strong rally on the markets next week, and that would help push gold down below $300/oz. At that point I'll start acquiring some, since I'm still very bearish on the market, and I'm looking to diversify some assets into gold. My overall take on gold is that it most likely won't go below $250, and could possibly go up quite a bit from here. How high? Who knows, but it could end up going quite high indeed, like over $800/oz. Of course, this is IMHO, and comes from the same place marketing projections come from. If you don't know where that is, ask a doctor to bring a flashlight and show you.
To: taxtruth
there is no safe haven if the dollar goes. Inflation will be imported and interest rates will go up which kills the economy, stock market, real estate and gold. This is why no one in govt. is allowed to argue for a weaker dollar, even though the current account deficit demands it.
14
posted on
05/04/2002 12:02:17 AM PDT
by
staytrue
To: Tauzero
The dollar wave count is much clearer to me, and points to at least one more rise before the dollar dies. The dollar is so important to the entire world, the players will not let it die that easily. There will be several massive efforts to prop it up before it dies.
15
posted on
05/04/2002 12:04:40 AM PDT
by
staytrue
To: Billy_bob_bob;rohry
Here is an important article (SafeMoneyReport)Debt Disaster Looming (05/02)
We've been telling subscribers to Safe Money for months now that Xerox is on the brink of disaster. So we weren't surprised to see Moody's downgrade the company today. We were just surprised it took this long. After all, our research shows that the company has $16.2 billion in debt with just $4 billion in cash, and its sales are plunging!
But Xerox is not the only company investors should be worried about. We've identified hundreds of other companies with huge debt loads. Here are just a few:
* Nextel is drowning under $16.7 billion of debt, and has only $4.2 billion in cash on hand. Plus, the company has lost over $3 billion in the last 21 months alone.
* PSINet, a leading provider of Internet backbone services, has $3.7 billion in debt, annual interest expenses of more than $398 million, and it doesn't even generate any cash!
* Maytag, Rite Aid, and Finova Group are just a few of the other American corporations that are up to their eyeballs in debt with little practical hope of repaying.
And there are many more examples just like these.
No wonder corporate credit ratings are plummeting. For the past TEN quarters in a row, the trend has been three corporate credit downgrades for every one upgrade. And a fourth of all junk bonds are now trading at distressed levels. Welcome to the club, Xerox.
To: Billy_bob_bob;rohry
Here is an important article (SafeMoneyReport)Debt Disaster Looming (05/02)
We've been telling subscribers to Safe Money for months now that Xerox is on the brink of disaster. So we weren't surprised to see Moody's downgrade the company today. We were just surprised it took this long. After all, our research shows that the company has $16.2 billion in debt with just $4 billion in cash, and its sales are plunging!
But Xerox is not the only company investors should be worried about. We've identified hundreds of other companies with huge debt loads. Here are just a few:
* Nextel is drowning under $16.7 billion of debt, and has only $4.2 billion in cash on hand. Plus, the company has lost over $3 billion in the last 21 months alone.
* PSINet, a leading provider of Internet backbone services, has $3.7 billion in debt, annual interest expenses of more than $398 million, and it doesn't even generate any cash!
* Maytag, Rite Aid, and Finova Group are just a few of the other American corporations that are up to their eyeballs in debt with little practical hope of repaying.
And there are many more examples just like these.
No wonder corporate credit ratings are plummeting. For the past TEN quarters in a row, the trend has been three corporate credit downgrades for every one upgrade. And a fourth of all junk bonds are now trading at distressed levels. Welcome to the club, Xerox.
To: Billy_bob_bob
Oops on the double post.
My e-bay gold index is $333 today, see
Ebay gold
To: staytrue
Realestate my die but gold always shines.Did you check the gold markets this morning?
19
posted on
05/10/2002 4:44:50 AM PDT
by
taxtruth
To: razorback-bert
To bad people hate to calculate past history in their formula when it comes to socalled fiat money matters because it's a no brainer.
20
posted on
05/12/2002 5:18:12 AM PDT
by
taxtruth
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