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This week the market started slow and then picked up speed – downhill.
Early in the week, producer prices came in flat but not enough to revive deflationary fears. Deflation is the economic condition in which prices keep moving downward. At first blush, it does not sound like much of a problem, except it is hard for companies to make a profit if they have to keep lowering prices to stay competitive.
Consumer prices came out and there was no sign of inflation. This was good news but not good enough to move the market. Midweek, we received mixed news from Intel. The technology/semiconductor bellwether, beat Wall Street estimates by a few cents a share. Revenue came in above estimates and profit margins had an up forecast for 2003. Then it was ruined when comments came that future capital spending would be on the low end of its expected range. This news spooked the market, dropping the NASDAQ and the Dow. Intel is one of the few stocks trading on the NASDAQ that is still a Dow Jones Industrial component.
The only remaining original Dow Component, General Electric Co., had workers back at work Thursday. It seems the strike was more like a protest, so labor issues have yet to be resolved. Unions have done a great service to our country – one hundred years ago. Unions no longer seem to protect workers from management; they protect workers from others who would do the work for less money. GE also announced that revenues were down in the fourth quarter. That news was not good but still in line with estimates.
Hans Blix sent the markets into a slide when he began “talking tough” to Iraq via a press conference. War seemed imminent when UN Inspectors discovered empty chemical warheads.
Gold then moved to a six year high; and the Euro moved above its previous peak against the dollar. Good news from IBM and eBay was overshadowed by the discovered warheads.
Microsoft, the other NASDAQ-traded Dow component, declared its first ever dividend. The cash rich company decided to share the wealth with shareholders. The tech behemoth also announced a stock split and slightly exceeded earning estimates. They also commented that they would not meet estimates for the current quarter sending the stock down.
Consumer confidence moved down slightly lower in anticipation of more definitive news on the economy.
The rest of the month will be dedicated to Fed speculating with housing starts and jobless claims coming in the week of the 20th. The Market is closed Monday in honor of Martin Luther King Day.
The main pall over the market this week was war with Iraq. Saddam Hussein blustered against the world this week pledging a fight to the death. However, he did not say his death, so Arab leaders also discussed his safe exile to Africa. Proverbs in 12:6 states, “The words of the wicked are of lying in wait for blood; but the mouth of the upright shall deliver them.” Certainly, Saddam is ready to spill the blood of his people and others and continues to lie to his own nation about their impending victory over the treacherous United States.
Once the war in Iraq does start, it will be over before the peace movement can say “Sheryl Crow.” However, until we have that certainty, the bear roams Wall Street. In Proverbs 28:15, “As a roaring lion, and a ranging bear, so is a wicked ruler over a poor people.”
When the bear in Iraq is defeated, the bear on Wall Street will finally be put to rest.
Marc Leavy, CFP?, is President of Principled Investing, Inc., a ministry that teaches that we have been entrusted with our Resources for a Reason?. He speaks regularly on stewardship matters and may be reached at [email protected].
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