Art Hogan
Art Hogan
banking bankrupt business concerns confidence entire exposure global investment level rather remain space
With the financials, that entire space has been tarnished by a confidence crisis. Also, on a more fundamental level rather than a psychological level, there's no investment banking business going on right now. The concerns remain about the banks' exposure to bankrupt telecoms WorldCom and Global Crossing,
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We have to get used to the fact that the emergency level of the fed funds rate is behind us, ... The sooner we become cognizant of the fact that the global economy won't be crushed and corporate earnings won't roll over, the sooner the market will fight its way to trend higher.
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Historically, six to nine months after rate cuts, the economy stabilizes and starts to swing in the other direction, ... But a lot of things are different this time. The Fed came off an aggressive tightening mode, and there's a global economic slowdown. It's just going to take a while longer this time.
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The price of oil is acting as a natural drag on the U.S. economy and the global economy. It creates a great deal of investor uncertainty, ... as earnings reports start coming in, it's going to be what companies tell us about the next three quarters that determines if investors get off the sidelines.
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The global reaction to this is more of a psychological response than a rational one. People wake up and read whatever wire service they're going to read and realize that one of the major Asian markets was down by up to 6 percent overnight, and there are a number of tech earnings disappointments and it tends to cascade. Eventually you get a more rational response after people have time to come to terms with what is really happening.
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I think we got oversold, not on negative news, but on fear that we'd gotten ahead of ourselves and that things can't hold up in the fourth quarter,
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I think we're going through this natural vacuum in the news cycle where we have a quiet economic calendar and the fourth-quarter earnings reports are slowing down. It's difficult to generate any interest in the market.
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I think we're clearly in summer vacation mode, so we're going to have low volumes -- which has a strange effect on equity valuations and tends to exaggerate moves,
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I think we'll start getting investors into the marketplace later in the first quarter,
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I think we'll see the stock market trying to price that (rate cuts) in the second quarter.
options
I think we need to get through the options expiration tomorrow,
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I think this market can hold on to this rally and start trending higher.
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I think this can sustain for the next day or two, at least until we get to all the earning and economic news in the second half of the week, ... Right now, the path of least resistance is still to the upside.
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I think the semiconductors and the Nasdaq had sold off a little more than the rest of the market recently, so you're seeing them gain, ... But basically we're all waiting for everything that happens next week.