geert lovink on Mon, 17 Apr 2000 18:23:05 +0200 (CEST)

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<nettime> From's DAILY BULLETIN April 17, 2000

Techs may be tanking, but 26 stocks MUST rise -- they're the
market's Relative Strength Leaders, churning out profits in good
markets and bad.

o Dow Jones Industrial Average: 10,305.77 down 617.78, -5.66%
o Nasdaq Composite Index: 3,321.29 down 355.49, -9.67%
o S&P 500: 1,357.31 down 83.20, -5.78%
o TSC Internet: 713.87 down 99.15, -12.20%
o Russell 2000: 453.72 down 35.50, -7.26%

In a mock interview, JJC grills a fictional portfolio manager who got
creamed last week.

This Week in IPOs: Is the Sun Setting on This IPO Market? Our cowboy in
Colorado says, 'Go whip 'em and drive 'em.'

Brokerages/Wall Street: Last Week's Selloff Is Nothing but Bad for Big
Brokers Fattened on investment banking fees and trading commissions, firms
could be facing a big slimdown.

4/16/00 5:46 PM ET Across the nation, the newspapers read with grim
authority. When referring to the bull market, the past tense is frequently
used. The game has changed, they say. The excitement of a few weeks ago has
been relegated to the past, it would appear.

Is the game truly over? Certainly, an intense amount of emotion now holds
sway in the marketplace. Assurances of yestermonth are long forgotten.
Every underpinning of this market is now in question. There's little doubt
that the long-awaited fear and worry is upon us. The question is: Does the
fear drive us deeper into oblivion or does it signal that the selling is
nearly done?

At this point, it's impossible to say. Singed investors, especially
individuals, have little stomach for the fight right now. And few big
investors show much inclination to step in and play the hero. More shaking
out is likely in the coming days and perhaps even weeks. It's a time to be
selective, to hunt for seeming bargains and to not get too carried away
with every snapback. We're in a grinding fight that will not easily come
back to the bulls.

Monday morning will provide an interesting test. Selling continued Friday
right to the bell. Some stocks are significantly off their highs, but still
trade at historically high multiples. And the palpable sense of fear will
provide plenty of resistance for investors on Monday morning. Watch Asia
and Europe carefully -- we'll have expanded coverage of both regions
leading into Monday's open. With so much heavy selling, whiffs of a
turnaround may start to surface early -- but a true turnaround may take
some time to develop.

Come Monday's opening bell, we'll have all hands on deck. Our columnists
will be writing throughout the day, our reporters will be digging every
minute, hunting for any sign. And we'll track the key earnings reports,
especially Intel's(INTC:Nasdaq), this week. Most on Wall Street expect
strong corporate profits, but it will take sustained, potently strong news
to knock the bears back a pace or two.

In addition, we'll have extra personal finance coverage to help you sort
through the mutual funds angle of the recent selling. Who is doing well,
who isn't, and where are the best places to put new money to work. We'll
have all the bases covered.

For those of you seeking more current research, go to the tools/quotes box
on the home page to access Multex-compiled institutional research. They
provide the latest skinny from major brokerage houses.

It's a bruising fight right now, but we're in the trenches with you,
digging for every morsel of information that will help make you a shrewder
investor. In times like these, we're not resting for a second, and we know
you're not, either.

L'Etoile du Nord

Dave Kansas Editor-in-Chief

Dave Kansas is editor-in-chief of In keeping with TSC's
editorial policy, he doesn't own or short individual stocks, though he owns
stock in He also doesn't invest in hedge funds or other
private investment partnerships.

The Coming Week: Intense Search for a Bottom Ahead

By Justin Lahart Associate Editor 4/14/00 7:02 PM ETForget greed. Fear is

Fear is the thing that shakes the weak holders, the seekers of quick
profit, the Johnnies-come-lately out of the market. Look at where the
market touched bottom in 1998, 1997, 1987, and there it is, at the fever

And who is to say that's not what we saw Friday, as the Dow and the Nasdaq
lurched into their final, terrible hour? Spreads between bids and asks
widened and volume dried up. The Chicago Board Options Exchange Market
Volatility Index, a good gauge of investor worry, surged to levels not seen
since October 1998. Earlier in the week, traders had griped that there was
too much investor complacency over the decline. By the time the closing
bell rang Friday, the traders weren't saying that anymore.

But the problem with fear is that there can always be more of it, and that
there will be more of it seems as much of a characteristic of cataclysmic
selloffs as anything. When the stoic start selling, when the last dip-buyer
gives up -- then it turns. The problem is that everybody -- your broker,
your dentist, your friend next door -- knows that. And that's worrisome.

"It was pretty dramatic, but it's still orderly," said Seaport Securities
trader Ted Weisberg, as he left the New York Stock Exchange Friday. "I've
been trading on this floor for 31 years -- 1987 felt much more dramatic."

"This wasn't as bad as last Tuesday," commented another floor trader. "It
didn't seem to have the same pressure on it. Here, it was like, turn
around, and you're just down another 100 points. Tuesday felt like a lot of

So it is hard to say what the coming week will look like. It is hard to say
whether the bottom has been touched or, if it has not, how far there is to
go. Maybe the only thing one can say is that if stocks haven't hit it, the
bottom is coming soon.

"Chronologically, we're getting close to as bad as it's going to get," said
John Manley, portfolio strategist at Salomon Smith Barney. Point-wise,
however, it's hard to even venture a guess.

But Manley does believe the market has reached a point where investors have
thrown the baby out with the bath water. On the Nasdaq Stock Market, the
average stock is more the 45% below its 52-week high. That hasn't happened
since 1987.

"I find myself in a very strange position," he said. "Three months ago, I
was trying to defend the position that there were growth areas outside of
tech and communications. Now I'm defending tech and communications."

Yet not everyone is so sure. Chartists note that there is very little
support on the Nasdaq Composite, and it is hard to see exactly where
investors will pick them up on a valuation basis. This is not to say that
some of these stocks may not be fundamentally sound buys at current levels,
but many of the newfangled valuation methods that some analysts were
pushing have been discredited by the market's freefall, and under older
methods there is a good deal more downside.

And there are other worries as well.

"I think the initial reaction has been that this is probably just a
technical and valuation issue," said Rich Bernstein, chief quantitative
strategist at Merrill Lynch. "Nobody wants to really say there are any
fundamental issues in the technology sector. I think that's wrong."

Yes, There's More Tightening Ahead

And the chief fundamental issue may be that it looks like the Federal
Reserve will continue to tighten -- never mind what has happened to the
stock market. Friday's strong Consumer Price Index only reinforced that.

"The risks of a more aggressive tightening pace have risen given not just
the CPI, but a variety of evidence that suggests inflation is creeping
higher," said Richard Berner, chief U.S. economist at Morgan Stanley Dean
Witter. "My feeling is they're still going to stick to the gradual pace,
leaving the door open for further moves."

As for the wealth effect, the degree to which the Fed believes U.S.
consumption has increased due to asset price appreciation, it is unlikely
that the selloff in stocks has done much to change that.

"Wealth effects accumulate over time," said Berner. "And given the breadth
and depth of the increase in wealth, it's going to take a prolonged
downturn in the stock market to reverse a lot of that." Though Berner does
note that it is hard to gauge what the psychological impact of the drop in
the market has done to confidence, even if it does make the consumer less
buoyant, the economy is growing at such a quick pace that it is doubtful
that it could slow of its own accord. Bit by bit, the Fed will keep on

That may be a hard thing for investors to deal with. Bernstein's colleague
at Merrill, equity derivatives analyst Steve Kim, talks about something he
calls the "Greenspan put." When the market crashed in 1987, during the
savings-and-loan crisis of the late '80s, during the Mexican peso crisis in
1994, and again in October 1998, the Federal Reserve lowered rates. It was
as if the Fed were writing free put options to protect investors on the
downside. Investors may have gotten used to getting bailed out, and seeing
the Fed's apparent penchant to raise rates despite the selloff may come as
a surprise.

"How do you discredit the Greenspan put?" asks Bernstein. "Well, we're
going to see it. Because he's going to tighten." And as he tightens, the
economy will slow. And as that happens, the consumer will become less
ebullient. And tech companies, thinks Bernstein, which not too long ago
were supposedly immune to interest rates, will see their earnings growth

But despite his bearish posturing on tech, Bernstein does not believe the
end is nigh, joking that people who once criticized him for being to
negative will probably start saying he's too positive.

"I don't think this is going to be as calamitous as people think," he said.

Let's hope he's right.

Les faits sont faits.

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