The Daily Reckoning
Weekend Edition
June 02-03, 2001
Paris, France
By Addison Wiggin

MARKET REVIEW: Profit Warnings, Layoffs... And A Rising
Market

"Profit warnings - and layoffs - are still a regular
feature of the landscape..." reports the Daily Reckoning
Blue Team, "but you wouldn't know it if you watched the
indexes. A global slowdown is underway... and all eyes are
on the US consumer. Can Joe Six-Pack spend his way out of a
global deflationary bust?"

The major indexes seem to think so... the Dow closed up 78
on Friday. Just the kind of response we've come to expect
from a schizophrenic market pumped up on Fed-roids. Indeed,
"there's a lot of money sloshing around out there waiting
to get into the market," one analyst told USAToday.

Still the big blue missed regaining the mythical 11,000
closing the week off at 10,990. The Nasdaq end up Friday 38
to 2149 - but lost 101 - or four and a half percent. The
S&P 500 gained nearly 5 to close the week down 17 points at
1260.

Markets Around The Globe: The Nikkei barely moved... the
DAX in Germany rose a mite, the London FTSE 100 remained
basically the same... and France, well... it dropped, but
not by much.

The Russell 2000 finished the day up 5 to close the week at
501.

ADD'L PRICES FOR THE WEEK: Relative Stability... Dollar
Still Strong.

Gold: $268
Crude Oil: $27.85
Natural Gas: $3.92
CRB Index: 210
Dollar Index: 118
The Sad, Sad Euro: $.84
British Pound: $1.42
Japanese Yen: $.84

* * * * * * * * * Advertisement * * * * * * * * * * *

The landing approach has begun. The flaps are down. A
moderate slowdown has hit the U.S. economy. Investors
are still optimistic.

It seems that everyone believes that Alan Greenspan has
engineered a soft landing for the formerly high-flying tech
bubble. But according to one of the world's leading
economists - it's worse than blind faith. It's "high-octane
'new paradigm' propaganda."

Here's what you need to do -- right now -- to prepare
yourself for the current crisis:

http://www.agora-inc.com/reports/RCLF/Revelations

* * * * * * * * * * * * * * * * * * * * * * * * * * * *
THIS WEEK in THE DAILY RECKONING
By Bill Bonner

06/01/01 MORE IN THEORY THAN IN FACT

"...America has more churchgoers than any other developed
nation. It has always had higher levels of religious
participation. Looking around the U.S., region by region,
the higher the level of church attendance - the more likely
the voters are to favor the 'invisible hand' of the free
market over the iron fist of government. It is rural areas,
and especially, the evangelical, super-church regions of
the south and southwest that vote for the free-market..."
http://www.dailyreckoning.com/body_index3.cfm?id=567

05/31/01 A FREER PLACE?

"...I've begun businesses in both countries. The numbers
may be technically correct, but they focus on the wrong
part of the story. The big difference between France and
America is not the difficulty of starting a business, but
the trouble of getting out of an unsuccessful one. Marks
and Spencers, the British retailer with a store around the
corner from my office, decided to close its doors in France
after losing money for years..."
http://www.dailyreckoning.com/body_index3.cfm?id=566

05/30/01 AMERICAN HERO

"...but the wires that held up the grapevines slowed the
plane. Harper jumped out of the cockpit with no further
injury. At first, Jacqueline Thomas thought he must be a
German. She started to run away. Then by some instinct she
decided to go to his aid. His face was covered with blood.
And the Germans could arrive at any minute..."
http://www.dailyreckoning.com/body_index3.cfm?id=565

05/29/01 I, GREENSPAN ... PART DUH

"...the Fed was chartered to protect the currency and
ensure the stability of the banking system. But its real
mission - now - is to keep the economy expanding. Why?
Because that gets politicians re-elected. Not only that, it
keeps the money flowing to Washington. Give people the
impression that they are better off...and they won't fuss
about taxes..."
http://www.dailyreckoning.com/body_index3.cfm?id=564

05/28/01 I, GREENSPAN ... PART ONE

"...the world's financial press has realized what you and I
saw months ago (thanks to Dr. Kurt Richebacher): This is no
ordinary inventory correction. It is more like the busts of
the 19th century...or maybe even the period leading up to
the Great Depression of the 1930s. It is caused by a
collapse of capital spending and cannot be readily reversed
by interest rate cuts...
http://www.dailyreckoning.com/body_index3.cfm?id=563

* * * * * * * * * * * * * * * * * * * * * * * * * * * *
HEADLINE, NEWS And INSIGHT: "Don't Fight The Fed"...And
Fallacies Of The Market...King Coal Making An
Appearance...

Fighting The Fed or Fighting History
By John Mauldin

So, where do we place our faith? Do we trust in Greenspan
or do we believe in History? The majority of investors are
betting on Greenspan. They believe Fed rate cuts will win
the day, avoid a recession in the US and help pull out the
world. That - plus the aggressive expansion of the money
supply - is the ONLY explanation for the recent in buoyancy
of the stock market.
http://www.dailyreckoning.com/body_headline.cfm?id=1199

Good Intentions And Their Unintended Consequences
by Raymond F. Devoe, Jr.

For seven years the Fed's "action" appears on the surface
to have worked. However, there were two unintended
consequences that will make this year's rapid rate cuts
less effective in preventing a hard landing/recession...
whatever. The first is a colossal misallocation of capital.
The second, well...
http://www.dailyreckoning.com/body_headline.cfm?id=1192

The Pros Can't Beat The Monkeys
by Lynn Carpenter

As you know, most mutual funds are well-near incompetent at
picking stocks any better than a monkey throwing darts.
John Bogle, creator of another Vanguard titan-the S&P 500
Index fund-calculated from looking at all the funds
available in 1969 and tracking them for the next 30 years
that you might as well throw darts-over your shoulder.
Blindfolded.
http://www.dailyreckoning.com/body_headline.cfm?id=1187

Coal Market Heating Up
by John Myers

It's impressive - U.S. coal producers saw exports surge by
a whopping 37% last year compared to 1999. An energy-hungry
world seems to have a craving for U.S. coal, a fundamental
that will put profits in coal companies and dollars into
the pockets of smart resource investors.
http://www.dailyreckoning.com/body_headline.cfm?id=1191

* * * * * * * * * * * * * * * * * * * * * * * * * * * *
The Blue Team Hotwire: Investment Intelligence Bulletins

Money.com reported Merrill's tech strategist, Steve
Milunovich as saying that "tech and telecom problems we're
experiencing might be more than a blip." The problem? An
obvious one for readers of the Daily Reckoning: capital
spending bust.

"Capital spending and tech stock performance are closely
correlated," says Mulkunovich. "The likelihood is that the
tech stock decline is foreshadowing a multiyear downturn in
capital spending."

Further, Mulkunovich also notes what Blue Teamers have
known for a long time... that "'old economy' return on
assets has at around 5 percent, calls into question whether
all the spending on tech really has increased
productivity."

For investment advice consistent with the ideas and
insights you read in The Daily Reckoning please enroll in
the DR Blue Service:

http://www.agora-inc.com/reports/STRT/BigReturns

* * * * * * * * * * Advertisement * * * * * * * * * * *

Several top geologists quit big firms, and start out on
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usual...

Nobody Notices The Good News Until It's Too Late.

Early investors make all the money before Wall Street even
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gains in stocks ignored by Wall Street, please click here:


http://www.agora-inc.com/reports/CRIS/GroundFloorOps

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