Steve Zito, Wharton School BS Econ, MS Fin, HTML Writers Guild
uses economic and technical analysis to forecast the direction of the stock market. The views in this newsletter are opinions only, and should not be solely relied on for your investment decisions.
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NASDAQ COMPOSITE
INDEX closed 1259.55

Aug. 6, 2002. Who is Selling, Who is Buying?

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August 6 Go To Page 2 Nasdaq Composite closed at 1259.55 Aug. 6. Nasdaq has fallen 2.57 (-0.2%) since July 27 page. Michael Hartnett, Sr. International Equity Strategist for Merrill Lynch pinned recent weakness in the Dow on European Insurance companies selling U.S. stocks to rebalance their assets and liabilities. He said Bear Market selling would stop only when the U.S. stock markets start going up. He explained a massive asset allocation (shift) from bonds to stocks on Tuesday, August 6 which caused the DAX German stock market index to rise 8% in one day from low to high. This also caused a wild 2.6% gap opening in the Nasdaq on August 6. Why surprise shift by a European institution? Hartnett said they perceive stocks as "cheap relative to bonds." Not cheap in absolute dollars, but with investment mandates of 100%, cheap stocks are more attractive than fixed income securities now at historic low rates of returns. Will the billions shifted from bonds to stocks on Tuesday have any implication for tomorrow and the future? Yes. Stocks have been falling for two years since the Republicans took the Presidency, and like his father publicly playing golf in the middle of the Kuwaiti War, George W. Bush has no REAL interest in the common man, but only his rich golfing buddies. Alan Greenspan was given an honorary Knighthood by the U.K. today, no word yet if he thinks U.S. stock markets are "irrationally exuberant." Sir Alan caused the Great Crash of 1987 when Dow Jones fell from 2744 to 1680 in only two months with a misguided interest rate policy in 1987. Alan's reward, they made a 76-year old U.S. Fed chief for life. Steve Slifer (Lehman Brothers) said about Alan on Tuesday (CNBC) "I dare say, the Fed chief was surprised by latest economic numbers showing weakness." Surprised? Alan Greenspan should spend a full day in the placement office of any major U.S. university, and see your American graduates struggling to get job interviews while thousands of Communist Chinese MBA students get instant interviews and then get hired on the spot for $10,000 less than their U.S. classmates. Yeah, Alan, the U.S. can do that with the H1-B visa program which granted 350,000 visas this year alone. On CNBC, WSJ reporter Becky Quick tried to pronounce, "defibrolator leads" and it took her 4 tries. Then she droned breaking news, Cisco's CFO Larry Carter is resigning. What? Cisco's CFO announced he may retire May 2003. Hey Becky, do you check your facts? Change your name to "SLOW." CNBC and its director GE, run non-stop ads, "For over 100 years, GE has been a company powered by ideas....because we know there are two things that make a company great, people and ideas." GE is one of only 46 out of 947 companies that have signed CEO certifications for the SEC by the August 14 deadline. Has Cisco signed any CEO certification?
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