Overheard On The Street
Here’s what they’re saying at mid-day:
Paul Desmond, President, Lowry’s
Research: “Throughout history, whenever a major speculative bubble has
burst, the effects have generally been universal; all stocks on all exchanges
have tended to be dragged down into a prolonged bear market. But that is not
what has happened here. The bear market was not even universal to the Nasdaq
market. During the same time that the dot.coms and the high-tech stocks on the
Nasdaq were collapsing, the Nasdaq Financial 100 Index, the Nasdaq Banks Index
and the Nasdaq Insurance index were, and still are, in relatively well-defined
bull market patterns.”
John Roque, Vice President, Arnhold and
S. Bleichroeder: “Here’s what we’re focusing on: We think the major indexes
can work higher — the DJIA to 11,000, S&P 500 to 1325, Nasdaq to 2500 — but
we don’t think the DJIA makes a new high. The 10-year Treasury note has topped
and its yield has bottomed. We don’t think rising rates will have and especially
negative impact on stocks because most everyone has been concerned about growth
slowing too much.
“While most everyone is talking about tech, tech, and tech, we’re
finding legitimately strong patterns in sectors most investors don’t necessarily
want to talk about. This scenario says these stocks will probably work higher,
and they include aerospace/defense, engineering/construction, publishing,
retail, steel, airlines, railroads, and life insurance.”
Frank Gretz, Market Analyst, Shields
& Co.: “They say,
‘don’t fight the Fed.’ They say that
because historically it’s been true. Now
maybe this time is different because the capacity glut versus an inventory glut
has the Fed pushing on a string. But one
thing for sure that makes this time different is that everyone knows, don’t
fight the Fed. And in the stock market,
what everyone knows isn’t worth knowing.Â
“When
the Fed was busy raising rates it was right to not fight the Fed but, of course,
no one got it. Now everyone gets it and
that seems a big part of the ongoing complacency, especially among institutional
investors. This latest rate-cut and
Greenspan rally just serves to reinforce the whole idea.
Don’t fight the Fed, and don’t hold cash.
The market can and should continue to move higher here on balance.
But counting on ‘don’t fight the Fed’ is like counting on the ‘New
Economy.'”