Weekly Wrap

Happy New Year!! My New Years Resolution is to get this Weekly Wrap to you each Friday by 6:00 P.M. EST. (I realize in the past I haven't been as dependable. This will change for 2001, I promise.) Speaking of dependable, it seems you could always count on Alan Greenspan to make an announcement from the Federal Reserve whenever the economy needed a boost. But this last December, when investors were waiting for a push, he neglected to lower interest rates. He just plain old said things were fine and that we were not in a recession. The nerve of him. The market was falling faster than Henny Penny's sky, and he says everything is fine. Investors were not happy, and the stock market continued to plummet. What exactly does all this mean you ask? Chick Cheryl did an article on the Federal Reserve not too long ago, which is worth the read. I had no idea who Alan even was before I became a Chick, and I still didn't understand much about him or the Fed before I read her article. (I'm still learning too, ya know.)

Anyway, this past week, our man Alan surprised the world and lowered interest rates on Wednesday. Out of nowhere, and unscheduled, he lowers the rates by half a point. Alan was not scheduled to speak until January 30th. but there he was, making an announcement. A rare inter-meeting move has not happened since the autumn of 1998 when a global economic crisis threatened to seize up world financial markets. After Alan lowered the rates, the market went crazy with some stocks soaring as much as 50%. The Nasdaq rose 14.2% and the Dow rose 2.8%. The question everyone is asking is, why did he do it this week? Why not two weeks ago? Did he see some serious signs of recession? Did he forget to do it in December because he was so busy looking for a Sony Playstation2? Who knows what really possessed him, but he did it, and the market for the time being, loved it. Rumors swirling around Wall Street have it that he is going to lower them again at the end of the month. The question is, is it all too little, too late?

On Thursday, the Fed then cut the discount rate by a quarter a point. (Again, if this sounds confusing, read Cheryl's article. To be honest, with this past week's moves, even I had to go back and re-read.)

Another influential person, President-Elect George W. Bush met with a bunch of Tech Titans in Texas this week. They were discussing the "Digital Divide", I mean trade and employment issues. Scott McNealy of Sun Microsystems and Steve Case from AOL were among the participants. "W" (Can I please call him that until he is the Pres? I'm going to have to ask Chick Megan if this is politically correct.) expressed long-term optimism for the economy and also said that we are in need of a "kick start." Do you think he has been talking to Alan? When asked what investors should look for when buy a company's stock, "W" answered... "Quality of Management, a Long Term Strategy and their Balance Sheet" I think our man W has been hanging around our website. (Ummmm, Hi Mr. Bush.)

Like these two events weren't enough for the week, there were some individual stock stories. Toys R Us (TOY) jumped 22% on Thursday on news that they had strong holiday sales. Same-store sales for the nine-week holiday period ending Jan. 1 rose 3.5%. Total sales for the nine weeks climbed 4% to $4.2 billion. I guess I wasn't the only one trying out Toys R Us again after Mr. "Knight In Shining" Eylers took over. I find it funny that in my Toys R Us article, I mentioned that Wal-Mart (WMT) had replaced Toys R Us as the number one retailer last year.and hopefully the new CEO Eylers could save the day. Well, guess who announced disappointing sales for December? Wal-Mart. Though they, along with Sears (S), say that a slowing economy and bad winter weather were the causes. Hmmmm. how come everyone else managed to plow over the river and through the woods to get to Toys R Us then?

Speaking of Grandmother's house, my Grandfather turned ninety years old this past week. Happy Birthday Bapa!! Can you imagine the markets he's seen? To him, Alan Greenspan and his Federal timing announcements mean not a whole lot if you're investing for the long-term. That's a lesson we can learn.

Happy New Year! For the Chicks New Year's Resolutions, check out My 2001 Resolutions!

Chick Karin

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