28 Mar 2002

Posted at 16:05h in The Friday Brief by
Today, economists are declaring the recession is over.  In fact, it was likely over before it was officially announced last fall.  This morning, the government released its data on fourth quarter Gross Domestic Product that showed the economy grew at a 1.7% rate. This strong increase suggests that the first quarter of this year may be the strongest in two years.  Increased spending on the part of the government and the consumer likely fueled growth as strong as 4.2% say the experts.  And that spending is likely to continue as the University of Michigan Confidence indicator rose to a 15-month high of 95.7 in March from a 90.7 in February.  Bloomberg reports that consumer spending grew at a 6.1% annual rate in the fourth quarter, the fastest pace since the second quarter in 1998. 

22 Mar 2002

Posted at 16:18h in The Friday Brief by
Investors’ primary focus continues to be on the economic indicators as we near the next round of corporate earnings pre-releases.  The week’s economic releases were decidedly more mixed than typical of the last few weeks, but the trend is still very good.  Tuesday’s news from the Fed caused some difficulty for the stock and the bond markets.  They left rates unchanged and dropped their stance that weakness poses the greatest threat to the economy, which was good news for economy watchers, but almost before the words were out, traders started selling stocks and bonds on fear that interest rates would soon be rising.  The Fed said “the information that has become available since the last meeting indicates that the economy, bolstered by a marked swing in inventory investment, is expanding at a significant pace.” 

15 Mar 2002

Posted at 15:57h in The Friday Brief by
Good Friday morning to you. If you get carried away by foreboding terms, today is rich with them. The all-familiar warning to Julius Caesar in Shakespeare’s play ‘beware the Ides’ has traversed the ages with a sense of foreboding. But the day itself was no more foreboding than any other day in Caesar or in Shakespeare’s time. The term ‘Ides’ comes from the earliest Roman calendar, according to Borgna Brunner of Infoplease.com. The Roman calendar organized its months around three days, each of which served as a reference point for counting the other days. Kalends was the first day of the month, Nones, the fifth or the seventh day, depending on the month, and Ides was the 15th day in March, May, July, and October and the 13th in the other months. Another phrase of forbiddance heard every so often is ‘Triple Witching Friday’. The term refers to the final hour of trading before equity options, index options, and index futures contracts expire. Because of contract schedules, a triple witching hour occurs four times a year, each time marking heavier than usual trading and greater volatility. Now that hocus-pocus is out of the way, let’s deal with some real information. The week’s numbers were more mixed than last week, but on balance, a continued recovery remains likely. Retail sales were considerably weaker than expected, but the data are preliminary. Given the seeming disparity with the other evidence, such as high unit vehicle sales and favorable chain store data, it is reasonable to expect that these numbers will be revised higher in months to come.

08 Mar 2002

Posted at 16:00h in The Friday Brief by
The week has been an exciting one for stock investors as proof of a turn in the economy mounted.  Notably, in yesterday’s Congressional testimony, Mr. Greenspan said the economy is “already improving,” revising comments made before Congress just a week earlier.  Professionals on market trading floors say this rally represents real buyers, not just short-coverers.  Also encouraging is the fact that the rally is more orderly than previous ‘panic’ rallies where money managers feared being left behind and, consequently, over-inflated stock prices as they bought in at any cost.