06/10/01 Green[span] Means "Go" The Daily Reckoning
Weekend Edition
June 09-10, 2001
Paris, France
By Addison Wiggin
MARKET REVIEW: Green[span] Means 'Go'
The National Association of Purchasing Managers (NAPM)'s
main index for the service sector is down 25% in just the
last five months. What's worse, productivity was down 1.2%
in the first quarter for the first time in 6 years. Just a
year ago productivity was purportedly growing at over 5%. Evidence to the contrary, Greenspan remained steady this
week. "As best we can see, there is little evidence of
emerging inflation," he told us this week. "Higher costs
(i.e. Energy) are not following through as pressure on
prices."
Greenspan has interpreted the lack of "price pressure" as a
green light to print money with impunity… Still the markets have hardly noticed. The Dow was down 113
for the day Friday to 10,977. The S&P 500 lost 12 to close
the week at 1264 and the Nasdaq shrank back 48 to 2215. For
the year the Nasdaq and S&P remain off the start, down 10%
and 4% respectively. The Dow has gained a smidge. It's up
1.8% YTD. ADD'L PRICES FOR THE WEEK: all but nowhere, this week
Gold: $274.50
Crude Oil: $28.33
Natural Gas: $3.92
CRB Index: 211
Dollar Index: 119
The Sad, Sad Euro: $.85
British Pound: $1.38
Japanese Yen: $.82
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Keep Your Eye On The Money Supply "The nation's M3 has expanded this year," says Sean
Corrigan of Capitalinsight.co.uk, a London-based economic
consultancy, "at a pace roughly equivalent to the whole
output of the Italian economy in the same period." … Feeding money to consumers at the same time only
exacerbates the problem…allowing them to buy what they
have neither earned nor saved for. And giving rise to not
just a stock market bubble but a "lifestyle bubble." From Blue Team member David Tice: "This 'lifestyle bubble'
has left the economy with a tremendous double-edged sword.
It is painfully clear that it is in the best interest of
the individual to retrench and start building up savings
once again, however, if all consumers put the breaks on
consumption the economy would definitely be thrown into
recession." The US savings rate has dropped consistently from a high of
nearly 6.5% of disposable household income in 1995 to a
negative 0.5% in May. Addison Wiggin,
The Daily Reckoning
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