As I write this letter, the market is falling rather dramatically.  It was triggered by the PPI release this morning which was down considerably below expectations, primarily on falling energy prices.  Since then, the newswires show that 50 U.S. and British aircraft have attacked three Iraqi military targets.  Given the recent terrorist and military hostilities in Israel, the market undoubtedly fears worse trouble in the Middle East. 

Increasingly, economists are saying the worst may be behind us, but recovery is not clearly in sight.  Mr. Greenspan’s comments to Congress yesterday pointed to the possibility of a turn in the economy in the second half of this year, but he warned that the current malaise could likely continue for some time to come.  Recent company earnings reports have not been as bad as feared while revenues did disappoint more often.  Managers in general have done an excellent job cutting expenses in the face of this dramatic slowdown, but their reluctance or inability to provide any meaningful guidance about the near-term future weighed on stock prices.