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The Daily Reckoning Weekend Edition It`s all bad. The litany of economic reports that came out yesterday reads likes the opening scenes a Stephen King novel. The carnage hasn`t taken place yet, but any reader worth his salt knows what`s coming. The victim? Well... in this case, the US economy: The number of people looking for work but unable to find it climbed to 8.2 million; overall unemployment inched it`s way back to 5.7 percent; manufacturing numbers dropped to the lowest level in a year; and consumer spending - the key ingredient in the Fed`s favorite recovery recipe - dropped six tenths of a percent in September despite an increase personal incomes. Like a frat boy who`s downed one too many beers, it appears the American consumer said `no more` in October ... and headed off to a different part of the house to find a toilet. Zero percent financing can`t even lure the bloated to consume any more. Ford sales fell 34% in October. GM`s fell 32%. Chrysler`s dropped 31%. "The consumer response to incentives," Lehman Brother`s economist Joseph Abate says a little more politely in the Washington Post, "appears to have gotten weaker with each re-introduction of interest free financing." (You think?!) Strategic Investment`s Dan Denning sees the slowdown as a self-fulfilling prophecy. "Spending on cars typically makes up for 25% of consumer spending," Denning explains. "A car is a `big ticket` item. People wait to buy them until they can afford them. And once they`ve bought them, demand slacks off. By frontloading the year`s car sales over the summer, the carmakers guaranteed an anemic fall. "Now that cars are no longer driving increased consumer spending, and powering GDP growth, consumers are more aware than ever the economy is weak and getting weaker. And in a self-fulfilling way, anyone who WOULD consider buying a car will put it off until economic conditions look more promising." "With momentum flagging," Lehman`s Abate suggests, "the rapid erosion in confidence and the pickup in uncertainty are likely to severely restrain consumer and investment spending over the next three to six month... Likewise, a sharp pullback in durable goods orders in September suggests that businesses are not yet ready to expand capacity." Yet... after all these numbers hit the fan... the stock market rallied. Huh? The Dow gained 120 points to finish the week at 8517. The Nasdaq scooted ahead 30 points to 1360. The S&P 500 climbed 15, to 900. In fact, October 2002, in what will no doubt be one of the more spectacular and befuddling bear market rallies in US economic history, posted one of the best months on the Dow in 15 years. How do you make sense of it? The standard theory being debated in the mainstream media on this fine Saturday is that "all the bad news, is really good news" because it will prompt the Fed to cut rates (again) when they convene next week. Okay... If you`ve taken leave of your senses, and you attempt to follow their reasoning, you`ll be left with the impression that the only important question unanswered is whether the Fed will shed another 25... or 50... basis points. We here at the Daily Reckoning have another question: have they forgotten what happened after the last 11 cuts? Cheers, Addison Wiggin, The Daily Reckoning P.S. As far as the Golds go we should not worry about which miner is the best. Pick one or two of the top ten and don`t worry which is the first out of the gate or across the finish line. They will all cross a winner. When gold rises and stays, the playing field will all level out. I personaly like Drooy because it is a great trading stock. I can trade this stock |
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| aus der Diskussion: | Durban Roodeport Deep Adr (DROOY) |
| Autor (Datum des Eintrages): | peter.wedemeier1 (03.11.02 14:34:16) |
| Beitrag: | 53 von 421 (ID:7748616) |
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