Embattled accounting firm Andersen LLP said on Wednesday about 2,000 of its workers will join rival Deloitte & Touche, as it reshapes itself while facing a criminal charge from its role as auditor for bankrupt energy trader Enron Corp.
Posted on 05/08/2002 3:42:34 PM PDT by rohry
Short term, the market actually made 200 points on the DJI just on the futures before the market opened. Ditto for 40 points on the NASDAQ futures. By the time the market opened the shorts had to move and they surely did. Bravo for the Plunge Protection Team -- with some futures trading, CSCO earnings and alleged increase in productivity we had a monstrous rally with most of the action occurring before or immediately after the market opened.
Long-term is more interesting. I wonder if anyone reading this remembers 1996. By February of that year the market was on a tear but the P/E was still 15 but the market sold for 3.2 times book value (Average 1.74), the dividend yield was 2.4% (average 20 years 3.6%) and the total capitalization of the market was 90% of the Gross Domestic Product. Pricey stocks but on a tear.
On 5 December 1996 with the DJI at 6437, Alan Greenspan made his first "irrational exuberance" comment. By 1999 the market was really on fire and in 1999 and 2000 the Fed raised the Federal Funds Rate to 6.5%! This pushed real interest rates to 4.5% since inflation was 2% or less. Exuberant growth soon ceased to be a problem.
With this tight money, the yield curve inverted, the ten year treasury yielded 5.25% while the short term rates were 6.5%. The dollar soared in in foreign markets, gold and commodities tanked and tight money became evident. Also, by the way, 5 trillion dollars of stockholder equity disappeared almost immediately.
Since 2000 old Alan and the Fed have done everything possible to boost the market or at least hold the DJI above 10,000 and the NASDAQ above 1700. Today, short-term, they succeeded. The question is will investors buy stocks with PE'S in excess of 25 with no clear pattern of earnings growth and with no certainty that erratic Fed moves will not complicate investment decisions beyond the average person's ability to comprehend the problems.
To protect the markets the Federal Funds Rate is now 1.75% which is a 40 year low. To achieve this low interest rate Alan and the Fed cut rates faster and further than at any time in the entire history of our Central Bank. In addition, they must now believe in the "wealth effect" or the belief held by investors that their stock market holdings are really a form of money that they can and do spend. In any case, the Fed seems now willing to buy the market --if we can believe what they say and what others have reported.
From all perspectives, it is hard to be an optimistic investor at the present time. A great deal of the problem lies at the feet of the Federal Reserve. Good intentions have resulted in erratic movements of the markets based purely on the basis of bankers prejudices as to the economy and the markets.
Interesting fellow he may be able to answer your question.....Ferdinand Lips
Born in Switzerland in 1931, Ferdinand Lips, is a well-established and respected authority on gold and the gold market. His roots are in banking where he started his career, and became a co-founder and a managing director of Rothschild Bank AG in Zurich.
In 1987 he opened his own bank, Bank Lips AG, also in Zurich. He retired in 1998 when he sold his equity interest in the bank. Not being one to sit around idly, Mr. Lips continues to be very active in the banking, gold and financial fields. He is on the Board of various companies, among them African gold mining companies. He is also a Trustee of the Foundation for the Advancement of Monetary Education (FAME) in New York.
He has written two books previously (Das Buch der Geldanlage in 1981 and Geld, Gold und die Wahrheit in 1991). Gold Wars is his third book and expresses his views on gold, the gold standard and the gold exchange standard as well as the various attempts to manipulate gold and eventually push it aside. As a Swiss, he dedicates an important part of the book to the events leading up to the partial, but substantial, sale of Swiss gold reserves.
In his free time, Ferdinand Lips likes to spend time with his two daughters and the study of history, architecture and philosophy. Mr. Lips, a firm believer in the gold standard, lives outside of Zurich, Switzerland.
I have been looking for put plays on Cisco.
The opposite is a bear, the bear slides down a slope of residual hope. A few day rise can be steep, but the general decline is gradual and steady.
The 1930 chart you linked to shows that pattern.
I think that they were sending a message to the huge short positions. Maybe letting them know who is in charge and how they want the decline managed. Couldn't have been better timing. If the shorts pile on again today, expect the PPT to burn them again to make the message a little clearer for them.
Richard W.
shrinkermd's #22 an excellent summary.
Go gold. ;^)
Recalling the famous quote of Rothschild, it boils down to the question of who holds the real power. You are familiar with story linking JFK's issuance of US Notes with his assassination. Thanks for the helpful reply Soren.
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