The Trend Looks Bullish for at Least The Next Several Months.
- Subject: The Trend Looks Bullish for at Least The Next Several Months.
- From: Research@Make-Cents (Research@Make-Cents)
- Date: Tue, 11 Dec 2001 15:44:41 +0800
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<td width="50%"><font size="4"><b><font size="4"><b><font size="2">NEWSLETTER</font></b></font></b></font></td>
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<div align="right"><font size="4"><font size="4"><font size="2">Tuesday,
December 11, 2001</font></font></font></div>
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<b>Global Quantitative Strategy</b></p>
<font size="2"><font size="2"><b><img src="http://www.make-cents.com/images/smclogo.gif"; width="60" height="16">
Make-Cents</b></font><font size="1" face="Arial, Helvetica, sans-serif">
</font>Friday's disquieting jobs report continued to reverberate
in the market Monday. With the economy sending mixed signals and
generally failing to herald a recovery with any real conviction,
investors regarded the payrolls number (down 331,000) as more than
sufficient reason to collect profits. Those twin barometers of the
new bullishness - Dow 10,000 and Nasdaq 2,000 - once again fell
victim to investors' skittishness about near-term earnings and economic
prospects. A few company-specific releases also tugged on specific
sectors of the market, such as technology and finance. The outlook
for the economy is spurring a wide range of arguments, with some
holding that the worst is past and others suggesting it yet lies
ahead. The consumer's willingness to spend is threatened by job
cuts, and so far the industrial sector has not stirred sufficiently
to rescue the economy (as the consumer did when manufacturing was
moribund). A resurgence in capital spending would signal a resurgence
in the industrial economy. But so far, companies are unwilling to
spend because they are uncertain about final demand and, just as
important, because wide credit spreads makes borrowed funds too
expensive. So many economists believe the Federal Reserve, which
can't really do anything about the spread itself, will do the next
best thing: effectively lower corporate debt rates by pulling lower
the bottom end of the spread.</font><font size="2"></font><font size="2">
</font><font size="2"><font color="#0000FF">for more <a href="http://www.zurichinvestmentgroup.com/signews.htm";>Subscribe
here </a></font></font></p>
<b><img src="http://www.make-cents.com/images/us.gif"; width="30" height="17">
Technical Market Update</b><font size="1" face="Arial, Helvetica, sans-serif"></font>
<font size="1" face="Arial, Helvetica, sans-serif"><img src="http://www.make-cents.com/images/bob.gif"; width="102" height="102">
Bob Dickey
MANAGING DIRECTOR RESEARCH
for RBC Dain Rauscher Wessels</font><font size="2"><b>
</b></font></p>
<font size="2">The early strength last week was met with some normal
profit taking late in the week, which is normal action in a bullish
trend, in our opinion. The markets are into areas in which they
spent several months and traded much volume at midyear, which makes
it more likely that the advance will slow from the strong pace of
the past two months, in our opinion. There is still quite a bit
of doubt about the prospect of further upside gains for the market,
as evidenced by the high put/call numbers and the heavy amount of
cash on the sidelines. The argument that stocks are overvalued on
a historical basis is also true, but we believe this has turned
into more of a reason not to do anything, rather than a reason to
sell, as it was one year ago. The lack of selling pressure and the
slow improvement of the sentiment from some deeply bearish levels
is providing the market with some consistent fuel for further gains,
in our opinion. Dips are buying opportunities in our opinion, and
although there will be consolidation periods along the way, we believe
the trend looks bullish for at least the next several months.</font><font size="2"></font><font size="2"></font><font size="2">
<font color="#0000FF">for more <a href="http://www.zurichinvestmentgroup.com/openacc.htm";>Subscribe
here</a></font></font></p>
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<b>Research News</b></p>
<font size="2"><b><img src="http://www.make-cents.com/images/scsfb.gif"; width="60" height="16">
CSFB</b>
</font><font face="Verdana, Arial, Helvetica, sans-serif" size="1"><font face="Arial, Helvetica, sans-serif">•
</font></font><font size="1" face="Arial, Helvetica, sans-serif">
Portfolio Strategy
INVESTOR SURVEY: Our key conclusion form our Semi-Annual Investor
Survey is that investor expectations for 2002 are conservative if
not low. Nearly 75% of the sample anticipate less than 10% earnings
growth for the S&P 500 in 2002 and 2003. Also, the plurality
of respondents expects 10-year Treasury bond yields to hover close
to or above current levels of 5.0% to 5.5%. Share prices should
remain in a narrow trading range over the next three months and
provide 10% to 20% gains by year-end 2002. Stocks could have considerable
upside potential if the sell-side numbers are anything close to
being attained.</font></p>
<font size="1" face="Arial, Helvetica, sans-serif">US Economics
Now Expect GDP to Grow in Q1'02; Recession, Which Began in March,
is Likely to be All But Over by Early Months of 2002
Three key points: First, we have revised up our US real GDP forecasts
for 2002 slightly, and now expect positive GDP growth as early as
Q1. We think the recession is going to be all but over by the early
months of next year; the economy is likely to start expanding again
in Q1. Second, we think inflation is taking another step down; over
the year CPI inflation could fall as low as 0.5% in the first half
of next year.</font></p>
<font size="1" face="Arial, Helvetica, sans-serif">Strategy - Global
Equity
Excess Liquidity has been at Record Highs, But There are Now Signs
of Some Slowdown
Excess liquidity is a major driver behind the current equities rally.
OECD excess liquidity is now the highest for over 20 years (measured
by money supply growth minus industrial production growth and inflation).
Traditionally this has been positive for equities. The three previous
periods of high liquidity- October 1982, January 1986 and December
1998 - saw equities outperform bonds by 18.7% 5.6% and 31.4% over
the following year.</font><font size="1" face="Arial, Helvetica, sans-serif">
</font><font size="2"><font color="#0000FF" size="1" face="Arial, Helvetica, sans-serif">for
more </font><font size="1" face="Arial, Helvetica, sans-serif"><font color="#0000FF"><a href="http://www.zurichinvestmentgroup.com/signews.htm";>subscribe
here</a></font>
</font></font></p>
<font size="2"><b><img src="http://www.make-cents.com/images/sargus.gif"; width="60" height="16">
Argus Market Report</b>
</font><font face="Verdana, Arial, Helvetica, sans-serif" size="1"><font face="Arial, Helvetica, sans-serif">•
MARKET REVIEW
• </font></font><font size="1" face="Arial, Helvetica, sans-serif">Value
Stock: KMG reports EPS of $1.08; reiterating BUY and price target
of $78.
</font><font face="Verdana, Arial, Helvetica, sans-serif" size="1"><font face="Arial, Helvetica, sans-serif">•
</font></font><font size="1" face="Arial, Helvetica, sans-serif">
Value Stock: HAL's management reassures investment community that
it will appeal the recent asbestos verdict</font><font size="1" face="Arial, Helvetica, sans-serif">
</font><font size="2"><font size="1" face="Arial, Helvetica, sans-serif"></font></font><font size="2"><font size="2"><font size="2"><font size="2"><font size="2"><font size="2"><font size="2"><font size="2"><font color="#0000FF" size="1" face="Arial, Helvetica, sans-serif">for
more </font><font size="1" face="Arial, Helvetica, sans-serif"><font color="#0000FF"><a href="http://www.zurichinvestmentgroup.com/signews.htm";>subscribe
here</a></font></font></font></font></font></font><font size="1" face="Arial, Helvetica, sans-serif"></font></font></font></font></font></p>
<font size="2"><b><img src="http://www.make-cents.com/images/sdain.gif"; width="60" height="16">
RBC Dain Rauscher Wessels</b>
</font><font face="Verdana, Arial, Helvetica, sans-serif" size="1"><font face="Arial, Helvetica, sans-serif">•
(SEBL) Siebel Systems, Inc. 12/10/2001 Buy-Aggressive ; Price Target:
$30.00 (Prev:$25.00)
E-BUSINESS APPLICATIONS
BUSINESS UPDATE: THE STABILIZATION THEME CONTINUES</font></font></p>
<font size="1" face="Arial, Helvetica, sans-serif">*We believe
Siebel is on target to meet expectations for the current quarter,
although we do not expect upside.
The company has set aggressive goals for upgrade activity within
its install base. We believe that upgrade activity has been limited
to date, although it still very early in the process. We maintain
our Buy-Aggressive rating on SEBL shares but are increasing our
price target to $30.</font><font size="2"><font size="2"><font size="1" face="Arial, Helvetica, sans-serif"><font color="#0000FF">
</font><font size="2"><font size="2"><font color="#0000FF" size="1" face="Arial, Helvetica, sans-serif">for
more </font><font size="1" face="Arial, Helvetica, sans-serif"><font color="#0000FF"><a href="http://www.zurichinvestmentgroup.com/signews.htm";>subscribe
here</a></font></font></font></font></font></font></font></p>
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