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Subject:  Re: Don't Get Fooled! Date:  12/5/2000  4:34 PM
Author:  BruceBrown Number:  18948 of 123839

Augieboo wrote:

Translation: If you are pricing in a rate cut, (as are all the WISE I've seen on CNBC today), then you are in for a nasty surprise in about a week.

I don't think anybody was expecting any rate cuts in June. A bias shift was the obvious expectation. The cuts would most likely begin in the first quarter and the bond market has this priced in.

Yippee, the election may soon be over, but so what? It doesn't change the fundamentals of a single company.

That is correct, but don't ever discount sentiment. Uncertainty in any form has a direct effect on sentiment.

Also consider: earnings season and tax loss selling are coming soon. Can you say, "retest the lows?"

Who knows if the exact lows will be tested, but certainly the next 10 days will be crucial for appropriate follow through.

A couple of other things you forgot to mention.

Oil dropped below $30 today (4 month low) and OPEC (here in Vienna) has been quite focused on getting oil between $22 and $28 next year. It's sitting at $29 and change right now. I would imagine that OPEC will be able to reach their target price range next year. Time will tell if they do reach it.

That being said, I remember well the economic slow down in 1990-91 and 93-94 and the effect on the corporate earnings front. Estimates will continue to come down as we move through the next few quarters for many companies. However, keep in mind that the market is a forecasting machine and equity prices are priced out into what is going to happen in the future. In the midst of all those estimate revisions over the next couple of quarters, the market will eventually start to forecast out what those companies will do in future quarters if the interest rate environment starts to ease. Apple - no surprise - just warned....


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