Bill Meehan
That's a tune older than most readers are and, until Mr. G slashed rates earlier this month, a tune that most investors had been singing since the end of last summer. It's also a question that thousands of wounded Giants fans answered in just a glance, as the always vocal and typically coarse Big Blue faithful slithered out of Tampa with nary a peep. At least I was spared a refresher course in the Sopranos-like language spoken by the team's most vociferous supporters on the flight home. It was peacefully quiet with jetBlue's terrific service and personnel an added plus. There's always a silver lining if one looks for it.
Unlike the super showing of the Ravens' team, the stock market basically went nowhere during my brief hiatus. The old Dow got a kick Tuesday, as blue-chips and cyclical stocks surged to the fore ahead of Wednesday's FOMC
announcement. The consumer confidence index fell to 114.4 from 128.3, and the decline in the expectations index was much worse, plunging to 77 from 96.9. Considering Mr. G's reference to "the fabric of consumer confidence," turning around heavily indebted consumers' expectations and avoiding a recession in the near term appear to be an almost impossible task. Any doubt about a 50 basis-point rate cut was erased, except for those talking about a possible 75 basis-point cut this afternoon. (AMZN Quote - Cramer on AMZN - Stock Picks) makes money!" That will be the headline when the company reports this time next year (on a pro forma basis, of course), or so the company now contends. It
reported a loss that was a penny better than consensus after the close. However, in order to meet its first profit projection ever, the magic money-losing machine will delete 1,300 jobs. Even considering the carnage to the stock, it's mighty tough to make the case that it's reasonably valued for a retailer. It's much easier to stick with a time-tested retailer that's executing on the Net, although it now appears that we're fast approaching a time when paring exposure to the group is warranted. Applied Materials (AMAT Quote - Cramer on AMAT - Stock Picks) and Adobe (ADBE Quote - Cramer on ADBE - Stock Picks)
unleashed more
bad news after the close, as both warned that they could miss first-quarter expectations. On a positive note, the warnings failed to cast a pall on futures trading Tuesday night and early Wednesday morning. With companies such as Amazon, AOL-Time Warner(AOL Quote - Cramer on AOL - Stock Picks), DaimlerChrysler(DCX Quote - Cramer on DCX - Stock Picks), Lucent(LU Quote - Cramer on LU - Stock Picks) and MCI WorldCom (WCOM Quote - Cramer on WCOM - Stock Picks) lopping off heads faster than the Ravens' defense, the Fed head's stating that economic growth is "probably very close to zero" and profit growth is heading in the same direction, the market's fate appears to be balanced primarily on the shaky ground of how consumers feel. While it's unlikely that this morning's preliminary estimate of fourth-quarter GDP will stir any emotions, the Fed's decision Wednesday afternoon might do the trick, at least for a while. Anything other than a 50 basis-point cut is unlikely, but perhaps the FOMC has preliminary indications of Thursday's NAPM report and Friday's employment report
data. In any event, if a 75 basis-point cut is given much consideration by the FOMC, holding a 25 basis-point cut in abeyance makes more sense, as it allows for another surprise cut before the March meeting. Having not had the chance to peruse my charts at this early hour, I'm at a bit of a disadvantage, but the generally sideways action in the Nasdaq Composite Index and S&P 500 has likely made the market look a bit better. In a mixed day for tech stocks, the Philadelphia Stock Exchange Semiconductor Index, or SOX, posted a solid gain Tuesday, and breadth has continued to be very positive through the consolidation. Investor sentiment also remains mixed, with the biggest alarm being last week's large jump in bullishness in the American Association of Individual Investors poll to 49.2 from 36.6. Market Vane bullish sentiment also increased, but was still only 30%, and Investors Intelligence saw a slight dip to 56.8%. The crux of the matter is whether aggressive Fed easing will halt the slide in consumer sentiment. With job cuts a lagging indicator, we're apt to see consistent news of layoffs followed by consistently negative news reports weigh on consumers' psyches. That doesn't bode well for the market, which has yet to wash out the clamor for stocks among the general public. It's getting dicier, but I still believe a run to the 3450 area on the Comp is doable in short order. Scaling out of positions if we should approach it appears to be the best approach for aggressive traders/investors. A retest of the low later this quarter or in early April will also answer the question, "Am I blue?"
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