Monday, December 17, 2001
All equities markets tracked here lost ground last week, retrenching for a variety of reasons - profit taking, profit warnings and sagging economic indicators that said perhaps the U.S. revival isn't so near at hand after all. Economic data at best were mixed with British retail sales the star performer and Japanese indicators providing the gloomiest news. Official and private growth forecasts for 2002 were revised downward as the world economies continued to sink and speculation about the timing and shape of the turnaround are debated. It's getting more difficult to look beyond the next six months or so.
The Federal Reserve lowered its benchmark fed funds rate another 25 basis points to 1.75 percent. This was expected and already factored in by the markets. However, the Fed's statement that went along with the move left people guessing. Some interpreted it to mean that the turn is on the horizon while others chose to see it as confirmation that the U.S. economy will be weaker than investors expect. Overseas markets, which were weak prior to the Fed action, saw no reason to change their tone and continued to wither. The exception was Japan, where the key Tankan survey sank - but not as low as analysts had expected. The stock market rallied on this and the Fed action, but soon sank again on soaring bankruptcies data.
Forecast season
