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Would a fly without wings be called a walk?
If a parsley farmer is sued, can they garnish his wages?
What should you do when you see an endangered animal eating an endangered plant?
Do cemetery workers prefer the graveyard shift?
If a book about failures doesn't sell, is it a success?
What was the best thing before sliced bread?
Why do they call it a TV set when you only get one?
Is it true that cannibals don't eat clowns because they taste funny?
Why is there an expiration date on sour cream?
What do they use to ship styrofoam?
Why do they sterilize the needles for lethal injections?
What's another word for thesaurus?
If it's tourist season, why can't we shoot them?
How do they get deer to cross at that yellow road sign?
How did a fool and his money get together originally?
If corn oil comes from corn, where does baby oil come from?
If you throw a cat out a car window does it become kitty litter?
Deleted posts? Whassup?
Good Luck to All! :^)
PLAN the TRADE and TRADE the PLAN!
OT: Opinions wanted
This is a new board. I know EVERYONE has an opinion about Law Enforcement.
http://www.investorshub.com/boards/board.asp?board_id=938
~~~~~~~~~~~~~~~~~~~~~
Diverdan ><>
Greenspan speaks! Will people listen? Will people understand should be the question Eh?
Hi Didi! Hope that you are doing well. :^)
Have a great new year Didi. And to all those posting and lurking here as well.
<font color=green>Same to you, Rick, Muel, Bryan, & Jeoff! eom </font>
<font size=5><font color=green>Happy New Year!!!</fonts>
muel <g>
Happy and Prosperous New Year to Everyone & Peace to All!
Happy new year Didi, to you and your family......eom
HAPPY NEW YEAR.....!!!!!!
Disclaimer
http://www.investorshub.com/boards/read_msg.asp?message_id=135097
<font color=green>Thanks, Bob, likewise! eom </font>
An interesting link for Chart people:
http://stockcharts.com/def/servlet/Favorites.CServlet?obj=ID29226
SmartMoney: "The Year Ahead"
INFORMATIONAL PURPOSES ONLY.
"The Year Ahead"
http://www.smartmoney.com/stockwatch/index.cfm?Story=2001yearend
"Semiconductors--Break Out the Chips"
http://www.smartmoney.com/stockwatch/index.cfm?Story=20011218
"Pharmaceuticals--The Right Medicine?"
http://www.smartmoney.com/stockwatch/index.cfm?Story=20011219
"Retail--Wait for a Sale"
http://www.smartmoney.com/stockwatch/index.cfm?Story=20011220
"Financial Services--Peering Down the Street"
http://www.smartmoney.com/stockwatch/index.cfm?Story=20011221
Thanks much, Rick & Bob. Likewise...
HO HO HO back at ya, Rick.
Di
==============================================
INFORMATIONAL PURPOSES ONLY.
"Tops in Tech for 2002"
http://www.businessweek.com/investor/content/dec2001/pi20011220_6101.htm
Selected Screen: http://prosearch.businessweek.com/businessweek/SEARCH_EXTENDED.html?template=corpsnap.htm
SF FedViews:
http://www.frbsf.org/publications/economics/fedviews/index.html
Chicago Fed:
http://www.chicagofed.org/forecast.pdf
>>>FedViews
December 14, 2001
Corresponding charts (PDF)
http://www.frbsf.org/publications/economics/fedviews/fedviews1214.pdf
Jack Beebe, Senior Vice President and Director of Research at the Federal Reserve Bank of San Francisco, states his views on the current economy and the outlook:
Following a sizeable decline in September, nonfarm payroll jobs fell sharply in October and November. Manufacturing employment continued to fall as it has done since 1998 and more rapidly since late 2000; recent monthly data have shown no turnaround in this pattern. But in October and November, employment declines spread well beyond the manufacturing sector. It is possible that recent data on initial claims for unemployment insurance are suggesting that the employment declines of December will be more modest than those of October and November.
The unemployment rate jumped further to 5.7% in November and is now almost 2 percentage points above its low in late 2000. The unemployment rate had risen surprisingly little in the first half of the year as employers held onto workers and as individuals dropped out of the labor force. But the rise in the unemployment rate during this recession is now looking more like what we had expected, and is very similar to that of the 1990-91 recession. On the basis of our growth forecast discussed later, we expect the unemployment rate to peak at around 6 1/4% by early 2003.
Capacity utilization in overall manufacturing continued to decline to 73% in November, while that in high tech fell to 60%. These data show the severity of the manufacturing recession which began well ahead of the March business cycle peak. There are now definite signs that sales in the semiconductor and computer sectors are beginning to pick up. However, in the communications equipment sector, we do not yet see signs of a bottom. Next year semiconductor and computer sales will pick up but sales of communications equipment could continue to languish into 2003.
The outlook for business fixed investment is mixed. Equipment and software investment, about half of which is related to high tech, turned down in 2000. In our forecast, we expect spending growth for equipment and software to turn positive by the middle of next year. Business structures investment, which is a very broad category encompassing all kinds of commercial buildings, structures for private education and hospitals, and construction for private utilities and mining, held up well into the early part of this year but is now declining very rapidly. We do not expect growth in this type of spending to turn positive until well into 2003.
Real spending on residential structures shows a very different story. This spending includes construction of all new homes and apartments as well as additions and alterations to existing homes. While recent data and those in our forecast bounce around quarter to quarter, there is no sign of a recession in this sector. This pattern is in sharp contrast to the deep recession that occurred in 1990-91 when spending on residential structures fell sharply for three consecutive quarters. Like consumer spending, spending on residential structures has been buoyed by declining interest rates and consumers' expectations that their permanent incomes will not be marred significantly by what is expected to be a mild recession. But like consumer spending, there are downside risks to residential investment if consumers become much more wary that their economic wealth might decline further.
Because of price cutting and zero financing incentives, consumer purchases of motor vehicles skyrocketed in October and November. However, December sales are beginning to sag, and sales in the first quarter of next year will depend critically on whether there are further price inducements. Recent fleet and rental car purchases have fallen off sharply, and bulging used car inventories are likely to cut into first quarter new motor vehicle sales.
Our forecast of consumer spending is stronger in the fourth quarter and then weaker in the first quarter because of variations in the level of auto purchases. The retail sector is expecting only modest Christmas spending with consumers directing their purchases toward "big box" outlets. In our forecast, consumer spending growth accelerates slowly in 2002 and more rapidly in 2003.
We are expecting near-term GDP growth to be negative in the fourth quarter and flat in the first quarter. Then we are expecting a relatively slow recovery beginning in the second quarter of next year. There are risks on both sides of this forecast. Stock and bond market activity over the past month or so suggests that financial players are expecting at least as much growth as we are forecasting, and perhaps more. There is at least a small possibility that the stimulus from monetary and fiscal policy (provided we get a fiscal package) will cause a burst of growth starting around the middle of next year. However, there's also a significant downside risk to this forecast. We are bound to see a string of poor earnings announcements for several more quarters as well as further layoffs and a rise in the unemployment rate. If consumers become more pessimistic in 2002, we could see significant declines in the stock prices, and consumer spending and residential investment would likely fall below the levels predicted in our forecast.
Despite November's surprise 0.4 percent rise in the core consumer price index, we are expecting inflation to edge down significantly over the next two years. Expectations of very tame price inflation, combined with slack in labor markets, suggest that labor cost inflation will recede almost a full percentage point over the next two years. Lower labor cost inflation, combined with a pickup in growth starting next year, suggests that unit labor costs will remain very tame. While firms will try to raise prices as markets strengthen, the continuation of general economic slack (as exemplified by the high unemployment rate and low capacity utilization in manufacturing) suggests that price inflation will decline over the two-year period. Our forecasts of core consumer price inflation are now about ½ percentage point lower in 2003 than we were forecasting 4-6 months ago.
After-tax corporate profits fell sharply again in the third quarter. Yet, special hits coming out of the September 11 attacks suggest that the fourth quarter profit rate may be a little above that of the third quarter. The picture for next year is that profits will lag in the recovery and the profit rate will be squeezed in most industries. Despite this possibility, analysts forecasts' of profit growth are rosy and, on top of that, price/earnings ratios in the stock market, even based on these rosy earnings forecasts, are very high. There are significant downside risks to the current level of stock prices, particularly through the first half of next year.
Stock prices have jumped up from their post-September 11 lows, and the risk premium on high yield debt has fallen back to its pre-September 11 level. Moreover, interest rates on high quality debt have risen sharply in recent weeks. The only way to interpret these developments is that investors are pricing in a fairly strong and certain economic recovery next year. Moreover, the forward term structure of interest rates through next year implies that investors are expecting the FOMC to raise the federal funds rate significantly after mid-year. Thus, investors currently seem to be betting that economic growth next year will come out on the HIGH SIDE of our forecast. In contrast, the FOMC in its latest statement maintained its concern regarding downside risks in the economy.
--------------------------------------------------------------------------------
FedViews is produced monthly, normally on the Friday or Monday following the second Thursday of each month. When these days immediately precede an FOMC meeting, distribution is delayed until the Friday morning following the meeting. The views expressed are those of the author, with input from the forecasting staff of the FRB San Francisco. They are not intended to represent the views of others within the Bank or Federal Reserve System. <<<
Merry Christmas and Happy Holidays Everyone! May you all have a Happy and Healthy New Year! Sincerely, Bob :^)
HO HO HO Didi...........Staying warm,,hmmmmmmmmmm What a beautiful day out here,,,Sun out but only 40,Merry Christmas to ya...........
*Rick*---The very best of this holiday season to you all and yours.....!!!!!!
Disclaimer
http://www.investorshub.com/boards/read_msg.asp?message_id=135097
Much appreciated, Muel, Geoff and Bryan.
May the holidays bring you much joy, peace, good health, and prosperity.
Take care.
Di
HAPPY HOLIDAYS ALL!
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OT: MERRY CHRSITMAS TO YOU DIDI
And all those that lurk on your thread.
Geoff
Hi Muel,
Great, may your dad's health continue to improve.
Likewise, "Happy Holidays" to you and yours .
Di
=========================
INFORMATIONAL PURPOSES ONLY.
"Quiet Bull May Stalk Wall Street in '02":
http://www.reuters.com/news_article.jhtml?type=businessnews&StoryID=458238
1st Call--Chuck Hill's Commentary:
http://www1.firstcall.com/commentary/market/index.shtml?commentary/market
Jim Glassman: "Tech Still Has a Place In Portfolios"
http://www.washingtonpost.com/wp-dyn/articles/A47269-2001Dec15.html
"Martin Capital Advisors, LLP is not responsible for the accuracy of the data contained in any of these charts or indicators. This information is provided for informational purposes only."
Good Morning Didi,
Yes I follow LG's board every day, and agree with you that there is a lot of good information on market condition there! Good board.
My dad is fine now, he had to have a defribulator installed next to his heart to keep it pumping in a normal rythm. He's back to almost 100% again and we are all very gratefull for that, thanks for asking.
Merry Christams & Happy Holidays!
muel <g>
Hi Muel,
Wow, quite an honor. Thanks much for the invite.
How's your dad's health?
Did you see LG's MDD board? Quite substantive, lots of informed contributors.
http://www.investorshub.com/boards/board.asp?board_id=733
Take care.
Di
Hi Didi,
Just stopped by to say hello, man have you ever grown your Ibox, great stuff there! BTW, I've started a new board here, it's called OTC BB Pulse: Daytrading and the symbol is (OTCDT)
here's the link to it. http://www.investorshub.com/boards/board.asp?board_id=866
I like your board well enough to put a link to it in my Ibox, hope thats ok with you. Also you might want to look at Archangel's Scrabble board here too, it's just like yours, except he hasn't done as good a job with his. Don't tell him I said that, lol! Here's the link to his board. http://www.investorshub.com/boards/board.asp?board_id=474
Stop by and visit my board, we'd be glad to see ya!
muel <g>
Al Crenshaw's "Life in Retirement Isn't as Cheap as Believed"
"Saving and planning for retirement are the KEYS to future well-being."--Albert B. Crenshaw, The Washington Post.
Best wishes to all.
Di
==============================
"Life in Retirement Isn't as Cheap as Believed"
http://www.washingtonpost.com/wp-dyn/articles/A11493-2001Dec7.html
Employee Benefit Research Institute:
http://www.ebri.org/
................
Selected Retirement Info:
"How Much Should You Save?"--Worksheets:
http://university.smartmoney.com/departments/retirement401k/retirementsavings/
Social Security-- Benefits Planner:
http://www.ssa.gov/planners/
Taxation:
...http://www.irs.ustreas.gov/prod/forms_pubs/pubs/p575tu.htm
..."Treasury Simplifies IRA Regulations"
........http://washingtonpost.com/wp-dyn/articles/A3975-2001Jan16.html
........http://ftp.fedworld.gov/pub/irs-regs/13048100.pdf
"How to Retire Happy" by Stan Hinden:
http://shopping.yahoo.com/shop?d=b&id=3829552&clink=dmks/Stan_Hinden
Ready to Retire? (Will You Be Ready?)
http://www.washingtonpost.com/wp-dyn/articles/A55651-2001Jan13.html
When the Nest Egg Cracks:
http://www.washingtonpost.com/wp-dyn/articles/A55656-2001Jan13.html
"After the Market's Fall"
http://www.businessweek.com/magazine/content/01_31/b3743602.htm
"How to Get Back on Track"
http://www.businessweek.com/magazine/content/01_31/b3743601.htm
Paul Merriman:
http://www.fundadvice.com/retirement/
=====================
>>>Life in Retirement Isn't as Cheap as Believed
Spending Stays About the Same, Study Says -- but Less Money Goes to Taxes and Saving
By Albert B. Crenshaw
Washington Post Staff Writer
Sunday, December 9, 2001; Page H02
How much money will you need to live on in retirement?
In the era of uncertainty about Social Security and growing reliance by employers on investment accounts instead of traditional pensions, it's a question that an increasing number of Americans are being called upon to answer.
The question is anything but easy. Much depends on a retiree's specific situation.
Financial planners often use the rule of thumb that retirees need between two-thirds and three-quarters of their pre-retirement income to maintain their pre-retirement standard of living. That is premised on the assumption that spending in retirement declines as expenses such as commuting, business clothing, lunches downtown and the like shrink or disappear.
A new study, which looked at the actual expenses of thousands of workers and retirees, concludes that for most people, three-quarters of pre-retirement income is about right, but not for the assumed reason.
In fact, the study found,
... average spending for consumption declines very little in retirement.
... The two big falloffs in expenses are from taxes and saving.
...Most other costs remain very much as they were during employment.
... Even transportation outlays, notably spending on cars and trucks, "remain about the same as working families'," the study found.
For a one-earner family of a retired wage earner aged 65 and a spouse aged 62 and a pre-retirement income of $50,000, overall spending declines only $603 a year in retirement.
The study, conducted by Chicago-based Aon Consulting, a human resources consulting firm, and Georgia State University was first done in 1988 and has been repeated over the years; the current version is the fifth. A report on the study was presented last week at a D.C. conference sponsored by the Employee Benefit Research Institute.
The study uses data from the Bureau of Labor Statistics' consumer expenditure survey, which has data on some 5,000 working singles and families and more than 3,000 retirees. It computes what it calls the "replacement ratio" needed to maintain the pre-retirement standard of living at various income levels. In other words, if a retiree needs 72 percent of pre-retirement income to maintain her standard of living, she has a replacement ratio of 0.72.
Georgia State professor Bruce A. Palmer, who supervised the research (Aon did the number crunching), emphasized that the numbers are averages, which are helpful in determining how people in the aggregate are faring but are not a particularly good guide for any individual, whose circumstances may differ.
"Our recommendation would be: Do your own calculation. These [numbers in the study] are not any more than guidelines," and an individual "probably shouldn't be looking at a single number but a 5-to-10-percentage-point range," he said.
Among the study's findings:
• Post-retirement spending is rising, so the replacement ratio at most income levels is rising.
In the previous study, in 1997, a couple with pre-retirement income of $60,000 could maintain their standard of living on 67 percent of that amount -- the two-thirds in the planners' rule of thumb. The new study puts the level at 75 percent.
• Saving by active workers as a percentage of income is declining.
In the 1997 study, a $60,000-a-year couple aged 50 to 64 and earning $60,000 was saving an average of 5.1 percent of income. Now it is 4.2 percent. And a $50,000-a-year couple's saving has dropped to 3.7 percent from 5.1 percent.
Only a $90,000-a-year couple -- as high as the BLS income numbers go -- continued to save at the same 5 percent rate. And that was for the 50-to-64 age group. Saving among younger high-income people also is sliding.
• Taxation of Social Security benefits -- or lack of it -- plays a key role in how retirees fare.
The study assumed that retirees would receive the normal Social Security benefits specified by law and that the remainder of their income would come from taxable sources. Social Security benefits for low-income people generally are not subject to federal income taxes. Only after certain thresholds are passed does 50 to 85 percent of the benefit become subject to tax.
As a result, middle-income retirees would generally see their taxes drop drastically as payroll taxes click off and a big chunk of their remaining income becomes exempt from income tax. It is this decline -- along with the assumption that retirees stop saving -- that accounts for most of the falloff in outlays in retirement, according to the study.
Palmer noted that in the early 1990s, when a new law boosted taxation of Social Security benefits for higher-income retirees, it added 3 to 5 percentage points to the replacement ratio of people in the $70,000-to-$90,000 income range.
• Low-income and high-income workers need more retirement income relative to pre-retirement income than do those in the middle.
In both cases this is because of taxes. Lower-income workers pay lower taxes, so when they stop having to pay them, their expenses don't fall all that much.
High-income workers pay a lot of tax but also would be expected to have higher incomes in retirement. Not only do these higher incomes mean they are in higher tax brackets, but they also result in more of their Social Security benefits being subject to tax.
A one-earner couple with pre-retirement income of $20,000 a year would need 83 percent of that income to maintain their standard of living in retirement.
Likewise, a couple with pre-retirement income of $150,000 would need 85 percent of that amount to maintain their standard of living, and a $250,000 couple would need 87 percent. (Since the BLS figures do not go above $90,000, these numbers are extrapolations computed by Aon.)
• Marital status plays a significant role.
For example, in the lowest income levels, pre-retirement taxes are higher for singles than for married couples, so when taxes cease, there's a bigger impact on singles and the replacement ratio is less than for a couple.
Singles at higher incomes, though, face much higher taxes in retirement than couples. The thresholds for taxation of Social Security benefits are lower, and, of course, the income tax brackets rise more rapidly than for a couple.
At higher incomes, replacement ratios are generally lower for two-earner couples than for one-earner couples, both because their Social Security benefits are greater and because there have been two payroll taxes on both incomes.
The study makes little attempt to interpret its findings, other than to note that "retirees continued to spend at relatively high levels after retirement while workers are saving at a low level."
In part, the message continues to be the one that Americans have been hearing for some years now:
Saving and planning for retirement are the KEYS to future well-being.
But it also suggests that changes in taxes -- either rates or structure, and especially Social Security taxes -- hold the potential for a major impact on retirees' standards of living.
© 2001 The Washington Post Company<<<
The Post: "Cost Estimate on Bomb Detectors Rises"
http://www.washingtonpost.com/wp-dyn/articles/A11550-2001Dec7.html
===================
>>> Cost Estimate on Bomb Detectors Rises
FAA Says Expenditure on Required Airport Equipment Will Exceed $4 Billion
By Sara Kehaulani Goo
Washington Post Staff Writer
Saturday, December 8, 2001; Page A10
The Federal Aviation Administration yesterday told a congressional subcommittee that it will cost more than $4 billion to purchase high-tech bomb scanners, machines that must be used to screen all checked luggage at U.S. airports by the end of next year under a new aviation security law.
The FAA estimate of between $4 billion and $5 billion, presented at a House aviation subcommittee hearing, is far higher than what was suggested during congressional debates on the airport security measure. But Rep. John L. Mica (R-Fla.), chairman of the House aviation subcommittee, said even the FAA estimate may be too low, because it does not include operational and maintenance costs.
Mica said the final price tag may reach $8 billion to $10 billion. "The administration is going to have to present a price tag to Congress, and I think there's going to be some sticker shock," Mica said.
The Aviation Transportation and Security Act, signed into law Nov. 19, requires the federal government to deploy sophisticated explosive-detective scanners at all U.S. airports by Dec. 31, 2002.
But it is unclear how much it will cost, what kind of technology will be used and how the program will be funded, a dramatic indication of the difficulties that the government will have in implementing the measure, which was passed after terrorists hijacked four commercial airplanes on Sept. 11.
The aviation bill instituted a $5 surcharge on each leg of a passenger airline ticket to pay for the airport security measures, and it also requires contributions from airlines.
But Mica said he did not think those funds would cover the cost of the bomb-detection machines. In addition, under the new law, the federal government will be responsible for a host of other expenses, including hiring, training and paying a new federal baggage-screening workforce.
There are "some fundamental and gargantuan challenges that we're going to face to try to make this work," Mica said while discussing the cost of the bomb-screening program.
There are 161 explosion-detection systems deployed in U.S. airports, said Steven Zaidman, the FAA's associate administrator for research and acquisitions. He figures the United States needs a total of 2,000 machines.
"I don't have a number at this time for operational costs," Zaidman said.
Only two firms, InVision Technologies Inc. of Newark, Calif., and L-3 Communications Holdings Inc. of New York, are certified by the FAA to sell bomb-scanning equipment for U.S. airports.
At hearings yesterday, representatives of both InVision and L-3 urged lawmakers and the FAA to move ahead quickly with purchase orders. InVision, the bigger of the two, said it has not increased production significantly because the FAA has not yet placed any orders.
Part of the delay, according to industry and government officials, is that the law calls for the formation of a new agency, the Transportation Security Agency (TSA), to take over responsibility for airport security.
Rebecca Trexler, an FAA spokeswoman, said the FAA is overseeing the bomb-scanning equipment program until the TSA is set up. "Until TSA becomes a real entity, the FAA will continue deployment with approval from DOT," Trexler said. "Things haven't been worked out yet."
Trexler also said that the appropriation request to Congress for needed funds would probably come from TSA but that she was not sure when that would happen or how much the agency would request.
Transportation Secretary Norman Y. Mineta said last week that the federal government would probably not meet its first deadline to examine within 60 days all checked luggage for explosives, using several methods.
Executives and consultants also debated yesterday whether the federal government could meet the December 2002 deadline to deploy bomb-scanning machines in all U.S. airports.
The two certified companies cannot supply enough machines by the deadline, given their current manufacturing capacity, although both said they could quickly expand or subcontract manufacturing.
In addition, security firms that have installed such equipment said it is likely to cost hundreds of millions of dollars to reconfigure airport terminals to accommodate the machines' minivan-like size.
Meeting the deadline is "simply not realistic," said Frank Vehlen, executive vice president and chief operating officer of Heimann Systems Corp., of Pine Brook, N.J., a firm that makes bomb scanners and is applying for FAA certification to install them in airports.
"Even if they were able to ramp up production, most airports would not be ready to receive the units by 2002," Vehlen said.
Rep. Peter A. DeFazio (D-Ore.) said the FAA could keep its costs down if it considered other, less-expensive technology. He said he met talked with representatives from American Science and Engineering Inc., a company in Billerica, Mass., that makes bomb-detection machines that are far cheaper than those made by InVision or L-3. He said American Science's equipment is used at the White House.
© 2001 The Washington Post Company<<<
The Post--John Berry's "BASIS POINTS"
http://www.washingtonpost.com/wp-dyn/articles/A11485-2001Dec7.html
======================
>>> BASIS POINTS
Sunday, December 9, 2001; Page H03
Federal Reserve officials are expected to lower their target for overnight interest rates by at least a quarter of a percentage point, to 1.75 percent, when they meet in a policymaking session Tuesday.
... It would be the 11th cut since the beginning of the year, when the target was 6.5 percent.
Several of the officials have said they expect the economy to begin to recover from the current recession within a matter of months, but they have also stressed the uncertainty of the economic outlook.
Analysts have interpreted their remarks as a strong indication that rates will be reduced, and they said the weakness of the U.S. labor market in November, which was reported Friday, removed any doubt. A few analysts said the cut might even be half a point, but others said that seems unlikely.
Meanwhile, bond prices plunged last week, with yields on five- and 10-year notes rising about 40 basis points.
Tomorrow, Treasury will sell $14 billion in three-month bills and $16 billion in six-month bills, which yielded 1.68 percent and 1.80 percent, respectively, in when-issued trading Friday.
Treasury will also announce tomorrow details of an auction of four-week bills to be held Tuesday.
-- John M. Berry
© 2001 The Washington Post Company <<<
The Post--John Berry's "large sales of bonds recently for reasons that are not clear."
"Unemployment at 6-Year High"
http://www.washingtonpost.com/wp-dyn/articles/A11120-2001Dec7.html
"How the Fed Guides Monetary Policy"
http://www.frbsf.org/publications/federalreserve/fedinbrief/guides.html
NY Fed--List of Primary Govt. Securities Dealers:
http://www.newyorkfed.org/pihome/news/opnmktops/2001/an011031.html
=============================
INFORMATIONAL PURPOSES ONLY.
Rearranged, boldface is mine.
>>>How the Fed Guides Monetary Policy
The Fed's monetary policy actions affect prices, employment, and economic growth by influencing the availability and cost of money and credit in the economy. This in turn influences consumers' and businesses' willingness to spend money on goods and services.
The Fed uses three monetary policy tools to influence the availability and cost of money and credit: open market operations, the discount rate, and reserve requirements.
OPEN MARKET OPERATIONS
The Fed's most flexible and often-used tool of monetary policy is its open market operations for buying or selling government securities.
The Federal Open Market Committee (FOMC) sets the Fed's monetary policy, which is carried out through the trading desk of the Federal Reserve Bank of New York.
If the FOMC decides that MORE money and credit should be available,
... it directs the trading desk in New York to BUY securities from the open market.
... The Fed pays for these securities by crediting the reserve accounts of banks involved with the sale.
... With more money in these reserve accounts,
........ banks have more money to lend,
........ interest rates may fall, and
........ consumer and business spending may increase, encouraging economic expansion.
To TIGHTEN money and credit in the economy,
... the FOMC directs the New York trading desk to SELL government securities, collecting payments from banks by reducing their reserve accounts.
... With less money in these reserve accounts,
........ banks have less money to lend,
........ interest rates may increase,
........ consumer and business spending may decrease, and
........ economic activity may slow down.
THE DISCOUNT RATE
The discount rate is the interest rate a Reserve Bank charges eligible financial institutions to borrow funds on a short-term basis.
Unlike open market operations, which interact with financial market forces to influence short-term interest rates, the discount rate is set by the boards of directors of the Federal Reserve Banks, and it is subject to approval by the Board of Governors.
...Under some circumstances, changes in the discount rate can affect other open market interest rates in the economy.
...Changes in the discount rate also can have an announcement effect, causing financial markets to respond to a potential change in the direction of monetary policy.
...A higher discount rate can indicate a more restrictive policy,
... while a lower rate may be used to signal a more expansive policy.
RESERVE REQUIREMENTS
By law, financial institutions, whether or not they are members of the Federal Reserve System, must set aside a percentage of their deposits as reserves to be held either as cash on hand or as reserve account balances at a Reserve Bank.
The Federal Reserve sets reserve requirements for all commercial banks, savings banks, savings and loans, credit unions, and U.S. branches and agencies of foreign banks.
Depository institutions use their reserve accounts at Federal Reserve Banks
... not only to satisfy reserve requirements,
... but also to process many financial transactions through the Federal Reserve, such as check and electronic payments and currency and coin services.
Altering reserve requirements is rarely used as a monetary policy tool.
However, reserve requirements
... support the implementation of monetary policy by providing a more predictable demand for bank reserves, which increases the Fed's influence over short-term interest rate changes when implementing open market operations. <<<
======================
>>>Unemployment at 6-Year High
Analysts Expect Hiring to Trail Economic Recovery
By John M. Berry
Washington Post Staff Writer
Saturday, December 8, 2001; Page A01
The nation's jobless rate jumped to 5.7 percent last month, the highest level in more than six years, as the recession drove employers in most industries to shed workers and cut costs.
Nearly a half million people joined the ranks of the unemployed in November, bringing the total to 8.2 million, the Labor Department reported yesterday.
The increase from 5.4 percent in October was evidence of the continued sharp deterioration of the job market since the Sept. 11 terrorist attacks. As the economy slowed over the past year, unemployment had been rising slowly, from a three-decade low of 3.9 percent in October 2000, before shooting up in the past two months, when 1.1 million more people lost their jobs.
The layoffs continued even as signs mounted that the recession that began last spring may be close to running its course, according to several forecasters, some of whom have begun predicting that the economy may start growing again early next year.
Even if the recession does end soon, many forecasters expect the unemployment rate to continue rising for several months, reaching 6.5 percent or so next year before it begins to come down. That's because at the end of a slump, as demand picks up, employers can usually boost production without having to hire more workers, which they usually don't want to do until they are sure how strong the recovery will be.
"If the economy were turning, the last place you would expect to see it is in the labor market," said economist James Glassman of J.P. Morgan Chase Securities.
The unemployment figures come from the department's monthly survey of U.S. households. A separate survey of employers provided equally bad news last month. The number of jobs on private and government payrolls fell 331,000, following an even greater 468,000-job loss in October.
The weak employment picture further convinced most analysts and some investors that Federal Reserve officials will cut short-term interest rates for an 11th time this year when they meet Tuesday. Most observers predicted the Fed will lower its target for overnight interest rates by at least a quarter-percentage point, but a few predicted another half-point cut. A quarter-point cut would lower the target to 1.75 percent, from 6.5 percent at the beginning of the year.
In a series of recent public appearances and in several interviews, senior Fed officials have stressed what they regard as the high level of uncertainty in current forecasts. However, they all generally expect the economy to begin to recover no later than the middle of next year and perhaps sooner.
"What we are starting to see is the resilience of the U.S. economy," Anthony M. Santomero, president of the Philadelphia Federal Reserve Bank, said last week. "There continues to be softness in some parts of the economy, but there has been less [impact from the terrorist attacks] than might have been expected. . . . We are starting to see some improvement in the high-tech area and we are running out of inventories" to be cut.
A number of forecasters now predict that the economy will start growing again in the first three months of 2002. And some economists have said there is a chance that enough of the October surge in retail sales, including a record number of motor-vehicle purchases, will continue through the end of the year to cause the overall economy to expand in the current quarter.
Investors in the stock market seem to be BETTING that a recovery will begin SOON. Although prices fell modestly yesterday, all the major markets indexes have risen strongly since the large sell-off after the terrorist attacks.
"In the equity market, you are supposed to anticipate a recovery when the Fed has been as accommodative as it has been, energy costs are falling and consumer spending is holding up well," said J.P. Morgan Chase's Glassman.
Long-term interest rates have gone up sharply in recent weeks -- and bond prices have fallen, since they move inversely with yields -- which some analysts say is also in response to expectations of a vigorous recovery that would cause the Fed to begin raising short-term rates within a matter of months. But Glassman said bond traders at his firm aren't sure that's why bond prices have dropped. There have been some large sales of bonds recently for reasons that are not clear.
Despite the rise in unemployment this fall, consumer attitudes are improving, the University of Michigan said yesterday as it released the preliminary results of its December survey.
The university's consumer sentiment index rose to 85.8 from 83.9 last month, the third consecutive monthly gain in the measure since it hit a low of 81.8 following the attacks. Most of the improvement has been in households' expectations about what the economy will be like a year from now rather than their assessment of current conditions, although analysts regard expectations as having more influence on consumer spending.
The improvement in consumer sentiment surprised many analysts, given the increases in unemployment.
As has been the case for more than a year, the brunt of payroll job losses last month was felt in manufacturing. The industry lost 163,000 workers last month and 1 million during the past 12 months. Employment at firms that supply temporary workers, many of whom work for manufacturing companies, also fell sharply and is down by 188,000 during the past two months.
And with job losses so heavy among factory workers, the unemployment rate for adult men rose a half percentage point, to 5.3 percent, a greater increase than among other demographic groups. Joblessness among adult women ticked up to 4.9 percent from 4.8 percent, and among teens it rose to 15.9 percent from 15.5 percent.
The unemployment rate for whites rose to 5.1 percent from 4.8 percent, for blacks it was up to 10.1 percent from 9.7 percent, and for persons of Hispanic origin it increased to 7.6 percent from 7.2 percent.
Through October, the latest figures available, the Washington metropolitan area fared far better on the job front than most of the rest of the nation. One key reason is the relatively small role manufacturing plays in the regional economy.
Even though there were thousands of layoffs in the technology and hospitality sectors, the area's jobless rate rose only by one-tenth of a point, to 3.4 percent, in October compared with the half-point increase nationally.
Staff writer Neil Irwin contributed to this report.
© 2001 The Washington Post Company<<<
==========================
>>>LIST OF THE PRIMARY GOVERNMENT SECURITIES DEALERS REPORTING TO THE SECURITIES REPORTS DIVISION OF THE FEDERAL RESERVE BANK OF NEW YORK
ABN AMRO Incorporated
BMO Nesbitt Burns Corp.
BNP Paribas Securities Corp.
Banc of America Securities LLC
Banc One Capital Markets, Inc.
Barclays Capital Inc.
Bear, Stearns & Co., Inc.
CIBC World Markets Corp.
Credit Suisse First Boston Corporation
Daiwa Securities America Inc.
Deutsche Banc Alex. Brown Inc.
Dresdner Kleinwort Wasserstein Securities LLC.
Fuji Securities Inc.
Goldman, Sachs & Co.
Greenwich Capital Markets, Inc.
HSBC Securities (USA) Inc.
J. P. Morgan Securities, Inc.
Lehman Brothers Inc.
Merrill Lynch Government Securities Inc.
Morgan Stanley & Co. Incorporated
Nomura Securities International, Inc.
Salomon Smith Barney Inc.
UBS Warburg LLC.
Zions First National Bank
NOTE: This list has been compiled and made available for statistical purposes only and has no significance with respect to other relationships between dealers and the Federal Reserve Bank of New York. Qualification for the reporting list is based on the achievement and maintenance of the standards outlined in the Federal Reserve Bank of New York's memorandum of January 22, 1992.
Securities Reports Division
Federal Reserve Bank of New York
October 31, 2001<<<
drsohn.com: "Financial Market Strategies" +++...
John Murphy's "Sector Rotation Through Economic Cycle"
...http://www.stockcharts.com/commentary/Murphy/Murphy20001111.html
...http://www.murphymorris.com/
..."The Visual Investor", page 197
=========================
http://www.drsohn.com/01publ/fms/2001/FMS121001.pdf <---stats
>>>Dr. Sung Won Sohn
Chief Economic Officer
Wells Fargo & Co.
(612) 667-7871
Dec. 10, 2001
FINANCIAL MARKET STRATEGIES
Economy: Mild Recession to End Early Next year
• Despite the jump in the November jobless rate, both the workweek and the aggregate hours worked remained stable,
indicating that the economy is in the process of bottoming. Without the inventory liquidation, economic growth during
the current quarter would be positive (charts 3,4). Consumer sentiment has risen for the third consecutive month
according to the University of Michigan (chart 2). Typically, employment and the jobless rate are lagging indicators.
Even after the economy troughs, the unemployment rate continues to rise due to labor force growth, productivity gains
and the cautiousness of employers. This will be one of the mildest recessions during the post-war period; the average
recession lasts 11 months and economic growth contracts 2 percentage points (chart 1). The current recession
should end early next year with the economy contracting about 1.0 percentage point from the peak. While less robust
than the historic average, the ensuing recovery will be healthier than the “jobless recovery” of the early 1990s.
• In 2002, the plunge in the interest rate and the massive amount of liquidity will boost economic growth by 2.5
percentage points and the fiscal stimulus by 1.2 percentage point. The lower cost of energy will contribute $100 to
$150 billion to the economy’s purchasing power. The healthy housing and mortgage markets will help sales of
consumer big-ticket items. Inventory stocks are so low that additional demand will lead to production and possible
employment gains.
Bonds: Time to Increase Risk Profile
• The market expects the Federal Reserve to cut the interest rate by another quarter point at this Tuesday’s meeting of
the FOMC. This may not be the optimal move. Current low interest rates and high liquidity make an economic
rebound in 2002 highly likely. The key issue is confidence for investors, consumers and businesses. A quarter point
cut will reinforce pessimism in the marketplace. Instead, Chairman Greenspan should stand pat, sending a message
that economic recovery is in sight and the economy needs no additional monetary stimulus.
• As the recession fears diminish, investors have been abandoning safe havens like Treasuries in favor of riskier assets
such as Corporates and Mortgage-backed Securities (MBS). Treasury yields have been so low that investors have
begun to chase yields in riskier instruments (chart 5). As the economic skies clear, low quality corporate bonds will
outperform higher quality issues. Corporate bond supplies will set a new record this year, offering an array of choices
for investors. MBS are in favor as the wave of prepayments due to falling mortgage rates becomes less of a concern.
Stocks: The Train Has Left the Station
• Investors have largely discounted a recession. Momentum has shifted to economically sensitive stocks including
technology, transportation, consumer cyclicals (autos, retailers) and basic materials (aluminum, copper, chemicals)
from defensive sectors such as telecommunications services, utilities and healthcare (chart 6). Starting from a middle
of a recession, equities typically outperform safe-haven investments (cash and bonds) by a wide margin. Also, small
and mid-cap stocks tend to do better than large-cap stocks. Besides, there is a mountain of cash waiting to be re-deployed:
$2.3 trillion at the end of October.
• However, it won’t be smooth sailing. Disappointing corporate profits and the year-end tax loss selling could create
turbulence in the market. Other risks include the war on terrorism, energy prices and the economic stimulus package
(could be stalled in the Senate).<<<
Gtober,
Though Chris Carolan's charts are dated, they're amazing calculations indeed.
Could the 1/14/2000 top be one of the greatest peaks? Several arcs in each duration.
Date Calculator:
http://www.geditcom.com/DateCalc.html
Di
This Week With Donald Coxe
Don's Latest Call -- Real Media
http://207.61.47.20:8080/ramgen/archivestream/dcoxe.rm
------------------------------------------------------------
The inflation bogey -- DONALD COXE
For a quarter century, the premier battleground for the ongoing dispute about the outlook for inflation and interest rates has been a futures pit a block from my office -- the Chicago Board of Trade. Befitting the board's history as the world's leading futures market for grains and soybeans, a mammoth statue of Ceres, goddess of agriculture, graces the peak of this landmark. If Ceres' concerns were still the backbone of the board's business, the financial history of our time would have been very different.
In the 1970s, some of the board's leaders began to realize food wasn't the stuff of financial progress. Working with brilliant thinkers at the University of Chicago, they devised a new kind of futures instrument -- the U.S. treasury bond contract. It didn't cover a specific bond, because bonds mature, and no single issue would be big enough to back a major futures contract. What the T-bond futures contract covered was -- and is -- a synthetic bond representing all long-outstanding treasuries. When this contract began trading, investors finally had a convenient, highly liquid vehicle for making simultaneous bets on the outlook for inflation and interest rates. (Gold is an excellent inflation hedge, but it is subject to the vagaries of central bank selling and is expensive to store and insure.)
For more than two decades, the activity in the T-bond pit has been a good gauge of investors' outlook on inflation, and how the Federal Reserve will seek to control it. Most of the time, prices in the pit trade in a narrow range compared with the swings in the Standard & Poor's 500 futures pit 10 blocks away at the Chicago Mercantile Exchange. In recent weeks, those pits have swapped roles. The bond pit has been the scene of the biggest price swings since the Crash of 1987, while the S&P pit has experienced reduced volatility as investors try to digest the stock market's big runup from the September panic lows.
What is unfolding is the latest chapter in the central economic and financial debate of our lifetime: what will happen to inflation? After the double-digit agonies of the 1970s, Paul Volcker, Margaret Thatcher and Ronald Reagan vowed they would slay the beast. Just about nobody believed them. In part, this skepticism was rooted in Club of Rome thinking. Since 1970, that collection of modern Malthusians, including Pierre Trudeau, had been meeting (in Rome, naturalmente) to wine and dine sumptuously, then emerge to predict global food and commodity shortages. Oil, metals and grains would be scarce forever, creating perpetual inflation, crises and wars.
As if those gloomy prophecies weren't enough, economists cited the ways in which inflation was ingrained into democratic economies: governments had to keep raising expenditures to create jobs and pay the endlessly mounting cost of social and health benefits. Those expenditures would be financed by rising taxes or deficits -- each of which was ultimately inflationary. Unions -- particularly public-sector unions -- had the power to bring the economy to a halt to enforce their demands for large wage increases with full inflation protection. Central banks were thus forced to print too much money to offset the rising costs of wage settlements and handouts.
No wonder investors concluded they had to protect themselves by buying oil wells, silver and gold. Bonds were horrible investments, and even stocks weren't safe because governments could grab the inflation-generated gains. (Canada's National Energy Policy was only the most egregious example.)
We now know the experts were wrong. Since Reagan and Thatcher's early years in power, inflation has been in secular decline globally. In each five-year period since 1981, inflation shrank, and in each cycle it fell harder than economists, investors and the public anticipated. Three inflationary decades had "proved" to all who would think about it that inflation was part of the human condition. Unlike smallpox and polio, it was ineradicable.
Long-term fixed-rate bonds are the worst-performing asset class when inflation rises more than investors anticipate. Conversely, as Canada's history since 1981 has demonstrated, they are the best-performing asset class when inflation falls much more sharply than anticipated. (Think how happy you'd be today to be holding the Canada bonds trading that year with 18-per-cent yields. Such yields were available on long bonds because both Ottawa and investors assumed double-digit inflation would last forever.)
Over at the board of trade, the old skepticism is returning. Long-term rates have risen sharply even as recorded inflation touches new lows under the hammer blows of a new force -- deflation. Economists again say (as they have so regularly since 1984) that the good news on inflation is over and again dismiss talk of deflation as absurd.
The performance of the global economy and financial assets hinges on the outcome of this latest outbreak of the inflation debate. I'll give you my take on that story next week.
Donald Coxe is chairman of Harris Investment Management in Chicago and Toronto-based Jones Heward Investments.
http://www.macleans.ca/xta-asp/storyview.asp?viewtype=search&tpl=search_frame&edate=2001/12/...
Incredibly interesting Didi.
By extrapolating, I end up with 2001.9 or so as the proper year for the next peak. The only problem is that peak occured in about 2000.1, a difference of probably over 500 days. I'm not sure if this could be considered a material difference.
Pretty amazing.
Chris Carolan's "Market Cycles"...courtesy of Anon
http://www.calendarresearch.com/
You've done it again, the "Fed Watcher" <g>!
http://www.investorshub.com/boards/read_msg.asp?message_id=220970
Been enjoying your posts on the MDD board, quite substantive and insightful. Keep up the great work.
Many thanks again <vvbg>.
Di
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