|
|
Enron Mail |
Cc: hankanne89@aol.com, ahilario@firstunion1.com, dblake3@firstunion1.com,
draack@firstunion1.com, gjones@firstunion1.com, hemery@firstunion1.com, jhavila@firstunion1.com, jkenny@firstunion1.com, jtaylor@firstunion1.com, kbowden@firstunion1.com, klogsdo@firstunion1.com, kthomps2@firstunion1.com, mdowd@firstunion1.com, nwhitti@firstunion1.com, pdowd@firstunion1.com, rchisho@firstunion1.com, remery@firstunion1.com, rnichol@firstunion1.com, sbenott@firstunion1.com, tdowd@firstunion1.com, tpullig@firstunion1.com, vweir@firstunion1.com Mime-Version: 1.0 Content-Type: text/plain; charset=ANSI_X3.4-1968 Content-Transfer-Encoding: quoted-printable Bcc: hankanne89@aol.com, ahilario@firstunion1.com, dblake3@firstunion1.com, draack@firstunion1.com, gjones@firstunion1.com, hemery@firstunion1.com, jhavila@firstunion1.com, jkenny@firstunion1.com, jtaylor@firstunion1.com, kbowden@firstunion1.com, klogsdo@firstunion1.com, kthomps2@firstunion1.com, mdowd@firstunion1.com, nwhitti@firstunion1.com, pdowd@firstunion1.com, rchisho@firstunion1.com, remery@firstunion1.com, rnichol@firstunion1.com, sbenott@firstunion1.com, tdowd@firstunion1.com, tpullig@firstunion1.com, vweir@firstunion1.com X-From: Henry Emery <HEMERY@firstunion1.com< X-To: HEMERY.HOUSTON_FANNIN1_PO.CENTRAL_DOM@firstunion1.com X-cc: hankanne89@aol.com, ahilario@firstunion1.com, dblake3@firstunion1.com, draack@firstunion1.com, GJONES@FIRSTUNION1.com, HEMERY@FIRSTUNION1.com, JHAVILA@FIRSTUNION1.com, jkenny@firstunion1.com, jtaylor@firstunion1.com, kbowden@firstunion1.com, klogsdo@firstunion1.com, KTHOMPS2@firstunion1.com, mdowd@firstunion1.com, nwhitti@firstunion1.com, PDOWD@FIRSTUNION1.com, rchisho@firstunion1.com, REMERY@FIRSTUNION1.com, rnichol@firstunion1.com, SBENOTT@FIRSTUNION1.com, tdowd@firstunion1.com, TPULLIG@FIRSTUNION1.com, VWEIR@FIRSTUNION1.com X-bcc: X-Folder: \RBUY (Non-Privileged)\Buy, Rick\Inbox X-Origin: Buy-R X-FileName: RBUY (Non-Privileged).pst Following is a report that I thought would be appropriate for the times. If= there is anything I can do for you in terms of research reports, or anythi= ng else, please feel free to contact me at 713-853-2407, or via e-mail. Thank You, Hank Emery ___________________________________________________________________________= ________________________________ Extra! What happens when the markets reopen? As leaders work to prevent a= political and psychological crisis from turning into a financial one, hist= ory offers the only real guide on what to expect when the smoke clears. By= Jon D. Markman =20 If you go way back, it was 139 years ago next week that Gen. Robert E. Lee= and his Confederate troops engaged the Union Army at Antietam, Md., in a b= attle that turned out to be the single bloodiest day in U.S. history. More = than 26,000 soldiers from both sides were killed or wounded on that Sept. 1= 7, 1862 -- a figure that will probably be eclipsed by the carnage of Sept. = 11, 2001. That attack, the first major thrust north by the surprisingly po= werful Southern rebels, led President Abraham Lincoln to issue his Emancipa= tion Proclamation * and open a new chapter in American civil and business l= ife, a new era of liberty for people and markets. Likewise have most major= events in U.S. economic history led to consequences unimagined by key acto= rs at the time. And so it will probably be with this attack. Sources across= the country told me Tuesday that they believe that the unexpected conseque= nce over the next few days and months could be a stock-market rally led fir= st by promises by the Federal Reserve to provide all necessary funds to sta= ggered banks and brokerages and next by vast deficit spending by Congress t= o shore up the country?s defenses. Michael Stutzer, professor of finance a= t the University of Iowa, points out that Tuesday?s events were a civil and= emotional crisis, not a financial crisis. An emotional crisis, he said, ca= n lead to a financial crisis only if mishandled by government authorities. = *A financial crisis is what happened in Japan, where people learned that no= t only were all the stocks they held were overvalued but that their governm= ent had a hand in leading their banks to bankruptcy,* he said. *Nothing lik= e that is happening here. But what does have to happen now is that the Fed = must act to prevent a ?contagion of fear? from spreading and leading people= to withdraw money and stop buying things. That would lead to a recession a= nd thus to a real financial emergency.* =20 A few predictions What are the likely immediate consequences when the U.S. = markets reopen later this week or next? Anthony Kolton, chief executive of= Markethistory.com in Chicago, has researched the past 100 years of events = that led the United States into war. He forecasts with confidence that the = major indexes will open with losses of 5%, then quickly recover by the end = of the following trading week to remain unchanged at pre-catastrophe levels= . *If there is a big opening plunge, I think you?ll see a total recovery ov= er the next five days,* he said from Manhattan. Kolton, who was en route = to a meeting at the World Trade Center when the buildings were hit, said he= also believes that the United States does not face a financial crisis just= because the buildings that were destroyed stood at the center of U.S. fina= ncial life. The reason: After the 1993 bombing of the buildings, he says, m= ost companies spent millions to build disaster recovery systems and back up= all their accounting far off site. *We?re going to recover,* he said. Ste= ve Milner, managing partner of the worldwide financial planning firm Squar = Milner in Newport Beach, Calif., said he is most worried about the consumer= , not business. Based on conversations with clients, he believes that peopl= e will react with fear -- and fearful people rein in their spending on ever= ything from vacations to home remodeling and stocks. That will be a real, n= ot an imagined, economic event, he believes, that could badly damage a U.S.= economy that is already sputtering. Milner also notes that many major fin= ancial institutions that he does business with were already inclined to be = sellers of the recent decline, not buyers. But that could turn around. *Peo= ple who were inclined to sell might be more inclined to sell now * but I do= ubt it,* he said. *There is a cynical part of me that says financial profes= sionals will realize that life goes on and will decide to be buyers.* Vic = Niederhoffer, a longtime trader for financier George Soros and his own acco= unts, says that he also believes that a big down market will find buyers. *= I really hate to sound mercenary, but I have received many messages from tr= aders who say that they think this will be a terrific opportunity to buy. W= hether you look at the John F. Kennedy assassination, the Eisenhower heart = attack, the Warren G. Harding ptomaine poisoning or airline crashes, usuall= y disasters provide the greatest times of opportunity,* he said. Niederhof= fer, a student of economic history, said that in the past disasters have le= d to a tremendous boost for local and national economies as capital infrast= ructure gets rebuilt with the most modern equipment. Those two buildings al= one will require massive outlays of funds * possibly provided by the Fed or= Congress from the U.S. Treasury * to build miles of new fiber-optic lines,= buy the latest data-transmission switches, and possibly tens of thousands = of new computers and software. *Everyone will chip in to help and this wil= l turn out to be a transitory event,* Niederhoffer said. *It may cause a te= mporary slowdown in the U.S. economy and a big disruption in the supply cha= in, but there is no evidence that declines in products or earnings or comme= rce have anything to do with stock prices anyway. In fact, there is no evid= ence to suggest that stocks do any worse in recessions than they do in bett= er times.* Mr. P, a hedge fund trader that I have quoted in past columns, = said he likewise believes that the first day?s move could set a bottom to t= he market. *This is very bad for bonds, very good for stocks,* he said. *Th= is act of war, with the magnitude of the loss of life, will lead Congress t= o engage in deficit spending like the world has never seen -- selling billi= ons of dollars of new government bonds to cope both with the reconstruction= of New York and the build-up of the American military.*=20 Always, history offers perspective So what if these scenarios don?t pan ou= t? The global financial system was already in bad shape before Tuesday and = sellers of stocks were swamping buyers with growing intensity. If worried i= nvestors decide to put all their personal funds in a lockbox and the Fed an= d Congress stand aside, you could look to the last major financial crises f= or the floor in the market. The October 1987 crash left the Nasdaq at 323= at its nadir, a level reached again four years later in October 1990 at th= e moment of greatest panic over oil supplies during the Gulf War against Ir= aq. If the markets had risen from there in a straight line that approximate= d the historic 6% return of stocks, that index would be at around 690 today= instead of 1,680. That could be a real floor, but it?s unlikely to trans= pire if authorities do their job and thus avoid the fate that befell Gen. G= eorge McClellan two months after Antietam. President Lincoln replaced him w= ith Ambrose E. Burnside after complaining about McClellan?s failure to pres= s his advantage after victory. His comment: *If you don?t want to use the A= rmy, I should like to borrow it for awhile.* The Bush administration likewi= se has a vast set of financial weapons at its disposal to battle this assau= lt, and the public will replace it if used unwisely and too slowly. =20 Top of Form 1 Resources Read/Post comments on the Start Investing message = board Find a problem in this article? Send us e-mail Free Newsletters! = =20 Search MSN Money tips =20 Bottom of Form 1 =20 MSN Money's editorial goal is to provide a forum for personal finance and i= nvestment ideas. Our articles, columns, message board posts and other featu= res should not be construed as investment advice, nor does their appearance= imply an endorsement by Microsoft of any specific security or trading stra= tegy. An investor's best course of action must be based on individual circu= mstances. =09=09=09 =09=09=09 =09
|