06/02/01 Profit Warnings, Layoffs… And A Rising Market The Daily Reckoning
Weekend Edition
June 02-03, 2001
Paris, France
By Addison Wiggin
MARKET REVIEW: Profit Warnings, Layoffs… And A Rising
Market
"Profit warnings - and layoffs - are still a regular
feature of the landscape…" reports the Daily Reckoning
Blue Team, "but you wouldn't know it if you watched the
indexes. A global slowdown is underway… and all eyes are
on the US consumer. Can Joe Six-Pack spend his way out of a
global deflationary bust?" The major indexes seem to think so… the Dow closed up 78
on Friday. Just the kind of response we've come to expect
from a schizophrenic market pumped up on Fed-roids. Indeed,
"there's a lot of money sloshing around out there waiting
to get into the market," one analyst told USAToday. Still the big blue missed regaining the mythical 11,000
closing the week off at 10,990. The Nasdaq end up Friday 38
to 2149 - but lost 101 - or four and a half percent. The
S&P 500 gained nearly 5 to close the week down 17 points at
1260. Markets Around The Globe: The Nikkei barely moved… the
DAX in Germany rose a mite, the London FTSE 100 remained
basically the same… and France, well… it dropped, but
not by much. The Russell 2000 finished the day up 5 to close the week at
501. ADD'L PRICES FOR THE WEEK: Relative Stability… Dollar
Still Strong.
Gold: $268
Crude Oil: $27.85
Natural Gas: $3.92
CRB Index: 210
Dollar Index: 118
The Sad, Sad Euro: $.84
British Pound: $1.42
Japanese Yen: $.84
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The Blue Team Hotwire: Investment Intelligence Bulletins Money.com reported Merrill's tech strategist, Steve
Milunovich as saying that "tech and telecom problems we're
experiencing might be more than a blip." The problem? An
obvious one for readers of the Daily Reckoning: capital
spending bust. "Capital spending and tech stock performance are closely
correlated," says Mulkunovich. "The likelihood is that the
tech stock decline is foreshadowing a multiyear downturn in
capital spending." Further, Mulkunovich also notes what Blue Teamers have
known for a long time… that "'old economy' return on
assets has at around 5 percent, calls into question whether
all the spending on tech really has increased
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