Joe Battipaglia
- Rande
- JackSwanson
- Mark_J
- JackSwanson
- Rande
- Mark_J
- Rande
- Mark_J
- Kirk
- Mark_J
This archived discussion is "read only".
For the corresponding "live" discussions, post in the active topic forum here.
« Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Next »
» Rande - Weekly Joe:
Weekly Joe:Last week, before the Senate Committee on Banking, Housing, and Urban Affairs, Alan Greenspan made several important remarks regarding the current state of the economy. I view these comments as constructive, not only in terms of signaling the end of the rate tightening cycle, but also in terms of easing investor's fears that there may have been other policy issues at the Fed such as stock prices themselves that may influence future actions. During his speech, Alan Greenspan commented:
that "growth in household spending has slowed noticeably this spring from the unusually rapid pace observed late in 1999 and early this year"…"and if that continues, the risk of a surge in inflation would greatly diminish ";
that "the evidence indicating that we need to raise the unemployment level to stabilize prices is unpersuasive ";
that rising energy prices alone don’t inexorably lead to surging general inflation without a commensurate shift in consumer expectations which has not yet materialized.
that interest rates are already at "relatively high levels in real terms "
These remarks suggest to me that the Federal Reserve Chief is less concerned about inflationary imbalances in the economy than he was several months ago. This is a clear positive for financial markets which have been concerned about the negative effects of excessive tightening by the Fed. For some time, I have emphasized that the economy would demonstrate good balance and stable prices that ultimately leads the Fed to neutrality. Last week’s speech is another indication that the Federal Reserve’s work is essentially complete. My forecast remains one of no further action by the Federal Reserve for the remainder of the year.
When addressing the causes of the slowdown, Mr. Greenspan cited flat stock market returns, higher interest rates, greater levels of household debt, and the normal pattern of slowing consumer demand after a period of robust spending. With this in mind, the Federal Reserve now expects economic growth to moderate next year with real output expanding by 3-1/4 to 3-3/4 percent. The Federal Reserve Board Governor also projected that next year’s inflation rate should be between 2 to 2-1/2 percent - somewhat above the average of recent years, but well below a level that would be deemed problematic for financial markets.
On balance, I am pleased with the overall tone of the Fed Chief’s comments. Mr. Greenspan also reasserted his view that strong productivity growth remains a key factor in raising the upper limit of growth in the economy without inflation. By acknowledging that the there is a real slowdown underway, that prices are stable, that real rates are high and that productivity remains strong, Mr. Greenspan has set the tone for the Federal Reserve to end the credit tightening cycle. Several months ago, I said that the economy should slow as the result of credit tightening and that would lead the Federal Reserve to neutrality before the elections. At this time, I do not expect any further increases in either the federal funds rate or the discount rate this year. As the current period of credit tightening draws to a close, I believe financial markets will turn in improved performance based upon record earnings.
My year-end targets remain 12,500 on the Dow Jones Industrial Average, 1,650 on the S&P 500 and 5,500 on the NASDAQ composite by year-end.
-- posted by Rande
» JackSwanson - Bat is a loser
Its clearly, folks, a no brainer that the market(s) won't reach Battapaglia's predicted highs. Its so easy to see its not gonna happen. BAT...he's a loser, and he's been placed into nomination!!!!!!!!!!!!!!!!!!!!!!!!-- posted by JackSwanson
» Mark_J - Certainly The Batman puts a different spin on events then our fa
Certainly The Batman puts a different spin on events then our favorite radio man. The radio guy recently said that year over year inflation was up to 3.7%, the highest since 1991. You know, the Bush recession.Batman is still predicting the moon and the stars. Naz 5500 says Joe by the time the big crystal ball drops down on Time Square.
-- posted by Mark_J
» JackSwanson - What Batman needs....
He needs to get his medical marijuana prescription changed.-- posted by JackSwanson
» Rande - Latest from Battapaglia
Latest from BattapagliaMonday, July 31, 2000
Weekly Perspective
Last week’s strong second quarter GDP report caused much consternation, but a closer look at the numbers shows that consumption spending grew at a more modest pace than any quarter during the past three years. Growth in personal consumption, which accounts for two-thirds of all spending in the U.S. economy, rose at a 3% annualized rate – a significant decrease from the 7.6% rate posted during the first quarter. This deceleration was helped along by six interest rate increases instituted by the Federal Reserve throughout the past year. The slowdown in personal consumption was broad-based and included an absolute decline of –3.9% in durable goods spending and more tepid growth for such categories as consumer non-durables and services. But as growth in consumption eased, investment by the private sector surged ahead at an annualized rate near 21%. Because of consistently high levels of investment in technology and equipment, gross private investment spending now accounts for over 20% of all spending in the U.S. economy – up from 14% in 1990. Not only has investment spending been the fastest growing segment of the economy for the past ten years, but it also is one of the least inflationary. Since 1997, for example, the GDP deflator for gross private investment spending actually declined by annualized rate of –0.1% versus a 1.6% annualized increase in the overall level of prices in the economy. The combined effects of slower consumer spending, rising investment demand, modestly higher government spending and a large inventory build amounted to a 5.2% overall annualized rate of growth in real output during the second quarter. While this final number was somewhat higher than expected, several key points stand out:
That there continues to be little evidence of mounting inflationary pressures. The GDP price deflator rose 2.5% following a 3.3% rise in Q1. The PCE deflator, that measures changes in consumer prices, rose just 2.3% versus an increase of 3.5% in Q1. Removing the effects of food and energy from the PCE, core consumer prices rose just 1.7% compared to a core reading of 2.2% in Q1. This suggests to me that the first quarter’s jump in consumer prices the result of a temporary rise in energy prices and not a resurgence of cyclical inflation.
Growth in consumer spending slowed to a more gradual 3% annualized rate from the strong 7.6% pace experienced during the first quarter. The Federal Reserve has voiced it’s concern about "excessive" growth in consumer spending, so slower growth should help alleviate some of the Federal Reserve’s concerns about imbalances and allow ample room to move to a neutral stance on monetary policy.
Investment spending, particularly spending on equipment, software and other technologies, continues to post significant gains despite higher interest rates.
In summary, I continue to see good balance in the economy with stable prices both at both the consumer level and producer level. Oil prices continue to move toward greater stability in the $25-$30 bbl range versus a range of $13-$34 bbl seen during the past three years. Second quarter earnings are also coming through well, and S&P 500 earnings growth for the first half could very well exceed 18% on a year-over-year basis. This is well above the 15% rate I projected for the full year.
With no evidence of rebounding inflation and some easing in consumer spending, I expect concern about the future course of Fed action to abate. Instead, investor focus should to give way to greater investor enthusiasm as the potential for an extended profit cycle well into 2001. I am changing no price targets, earnings estimates, asset or sector allocations at this time. My year-end targets remain 1,625 on the S&P 500 12,500 on the Dow Jones Industrial Average, and 5,500 on the NASDAQ composite.
-- posted by Rande
» Mark_J - Joe
Onward and upward from Joe. Ignoring the upticks in inflationary pressure. Ignorning earnings blow ups. Ignoring high PE values. Ignoring that most of the fed hikes have yet to show up in the rear view mirror numbers. Just saying that it doesn't matter; just, onward and upward.Oh, okay Joe.
-- posted by Mark_J
» Mark_J - Joe is on record (as is Abby), steadfastly shouting "federal res
Joe is on record (as is Abby), steadfastly shouting "federal reserve, schmederal reserve" and waiving the "Nasdaq 5500 by Dec 31" banner proudly.Shortly, it'll be 8/1/2000 on the west coast. He's got five full months for that index to make approximately 45% (3800 to 5500 would be a 1700 point increase). That'd be quite a rally in the face of interest rate hikes that haven't made their way through the economy yet and maybe another .25% or .50% hike in 3 weeks, 3rd and 4th quarter earnings that are likely to feature more and more blow ups as earnings disappoint, a 4th quarter of tax selling by investors who have lost money on the big names this year...
Okay, Joe, I'll give you the benefit of the doubt for now. We're almost at 3800 and have 45% to go to the target! That'd be a heckuva rally...
Maybe I'll post a frequent "Joe Watch" on this thread to track how his Dec 31 Nasdaq 5500 prediction is holding up. Why not!
-- posted by Mark_J
» Kirk - More hits!
Give me more hits Mark!I feel gyped that the station down the dial gets 10 hits to read 10 posts and I only get one hit here... I guess we don't want to goose the statistics at the expense of our readers... 8)
Actually, I think a Joe Watch would be great! I'd also like someone to track Jorgensen's Super-8, buy n hold forever, portfolio (up double digits ytd)
-- posted by Kirk
« Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 Next »
Please follow the guidelines set forth in the Suite101 Posting Etiquette when adding to the discussion.