Buckle Your Seat Belts
YOU KNOW THE FEELING, FROM ANY NUMBER of otherwise uneventful flights. As the plane descends and nears the ground, it rocks suddenly, one wing and then the other tipping toward the runway. Even experienced fliers feel a reflexive pang of concern, despite the odds and logic saying everything's fine: The pilots do this every day; the plane is built with stabilizers.
But what if the chances of a dangerous, rough landing were not so remote -- and, in fact, this outcome was pretty plausible?
The market is evidencing hints of worry that this latter scenario is a possibility. The predominant expectation and hope among investors for a gentle economic landing might now be coming under serious doubt -- even if it ultimately might come true.
Let's not get too carried away here. The major indexes last week dipped fairly modestly after a foray toward the former 2006 highs. The Dow gave up 52 points, or 0.5%, to settle at 11,508. The Standard & Poor's 500 slipped 5 points, to 1314, and the Nasdaq Composite lost 16, ending at 2218.
Weekly moves of half a percent in the market fall into the category of noise, and it's never advisable to draw direct links between fleeting headlines and a suggestible tape.
Suddenly Slow: Several reports implying a sharper deceleration in the economy gave pause to investors, and chopped 52 points off the Dow Jones Industrial Average. Caterpillar dipped by 4%. And Hewlett-Packard shares finally buckled under the company's increasingly bizarre boardroom scandal, sliding 3%.
Yet, circumstantially, it's apparent that the top-of-mind theme has changed, with accelerating inflation receding as yesterday's concern and too-steep an economic deceleration newly dominant.
Forecasters of the housing market keep penciling in modest, incremental month-to-month slippage in activity, and the data repeatedly arrive weaker than expected. The Federal Reserve policy makers' statement Wednesday drolly acknowledged this by removing the modifier "gradual" for the term "cooling" with regard to housing. The Philadelphia Fed's regional economic survey tanked into negative territory, and this release coincided with a selloff in stocks Thursday and into Friday that accounted for all the week's downside and more.
The Treasury market rallied furiously last week, the 10-year note's yield sinking to 4.6%; the implied odds of the Federal Reserve cutting short-term rates by year-end rose from zero into the double digits. (See Current Yield.) Small-cap stocks, proxies for liquidity and cyclical expectations, fell more than twice as far as large ones.
In other words, the body language of the market implies that it's absorbing the possibility that the economic slowdown now in progress might not be "gradual" or gentle enough to accommodate current expectations of corporate profit growth -- now pegged near 10% for 2007. According to Morgan Stanley, downward earnings revisions stalled last week but haven't yet shown clear signs of bottoming.
Of course, the apparently sudden collective focus on the risks to economic growth surfaced, as these things tend to do, just as a benchmark index is approaching one of those agreed-upon important levels.
The S&P 500 entered the week less than half a percent below its five-year closing high, set in May, of 1325.76. It approached the level Monday, and then on both Wednesday and Thursday the index briefly advanced above 1328 before sellers took over for the rest of the week. The Dow didn't similarly match the May high, weighed down by some of its higher-priced cyclical components -- such as Caterpillar (ticker: CAT) and United Technologies (UTX), down about 4% each.
The to-and-fro leaves the market in an intriguing spot, still quite close to its bull-market highs but with waning momentum from the rally off its mid-summer trough. The large-cap indexes have done a bit better than has the average stock during this upside run, a reversal from earlier rally phases, which speaks to a narrower, more defensive leadership.
Investor sentiment was steeply, and stubbornly, negative in prior weeks, with the market advance met with disbelief that it was "real." Bullish sentiment has recovered somewhat, but is far from enthusiastic, probably because of the widely discussed tendency for seasonal weakness in September. Yet psychology, short term, remains neutral, not at levels that typically usher in a can't-miss rally.
To say the tape is in a neutral state might come off as a cop-out. But most often it is roughly neutral: making noise, trending gently, oscillating in a range. For every bearish chart-watcher who is now certain we're witnessing a "double top," there's someone trumpeting the new all-time high in regional banks, which would suggest that the downside is limited.
The final week of the quarter is here, company profit news will pepper the wires, more housing data are on tap and no fewer than six Fed officials will be jawing at audiences in one venue or another. That can provide plenty of excuses for reevaluating what remains firmly a consensus belief -- the notion that growth will slow without tilting us into recession, while sparing the market the trouble of even the sheer fright it experienced before the last safe, soft landing.
FOUR YEARS AGO, WHEN THE CLIMAXING bear market was acting as the crucible for the present bull run, equity investors adopted the manner of bond specialists. Liquidity and financial flexibility were prized above all, and companies were urged to pay down debt, cut capital spending and keep their powder dry.
This was a shift from the late 1990s, when stock-fund managers often were aping venture capitalists, concerned only about the vast growth potential of the newest and latest thing. As Arnie Berman, Cowen's technology strategist, writes, money managers in those days most wanted to know this from companies: "How big is your opportunity?"
当心硬着陆
飞机乘客大都感受过降落时会出现的情形：飞机在下降到即将着陆时会突然振动起来，随后是一侧的机翼朝向跑道倾斜，然后是另一侧。在此过程中，即使是很有经验的乘客也能感到自己的恐慌，虽然从外表上和理论上看一切正常──飞行员每天都要做这些操作，而且，飞机也装有稳定装置，实在没什么可担心的。
但是，如果发生危险的硬着陆的可能性近在眼前，而且，出现这种结果看上去很合逻辑，那又会怎样呢？
眼下，市场上就出现了暗示或许发生后一种可能性的让人担心的迹象。虽然软着陆最后也许变成现实，但投资者对它普遍抱有的厚望现在看来或许要承受很大的怀疑。
让我们题归正转吧。上周，美国股市主要指数在前一周朝着年内高点一路高歌猛进之后转而温和下行。道琼斯工业股票平均价格指数跌52点至11,508点，跌幅0.5%。标普500指数跌5点至1314点，那斯达克跌16点至2218点。
一周内下跌0.5个百分点应该算不上什么大变动，而且，见到一闪而逝的新闻就要扯出些针对性的投资建议的做法从来都是不可取的。
不过，实事求是地说，很明显，投资者头脑里要考虑的首要问题已经有所变化，之前对通货膨胀加速的担心现在已让位于经济增长迅速放缓的新问题。
住房市场预测人士一直在描画着建筑活动逐月温和但不停息地下滑的前景，而相关数据也一而再、再而三地低于预期。联邦储备委员会(Fed)上周三发表的政策声明也承认了这一点。Fed在声明中提到住房市场时，以前使用的“逐渐降温”的表述中去掉了“逐渐”这个修饰词。费城联邦储备银行所作的地区经济调查降至负值，这个结果与股市上周四、五发生的扭转了前三日累计上扬走势的下跌不谋而合。
上周美国国债大幅反弹，10年期国债收益率降至4.6%；期货市场对Fed再次降息可能性的概率预期从零升到了两位数。更易受市场流动性和经济周期预期影响的小型股跌幅达到大型股的两倍多。
换言之，市场的外部表现显示出当前经济不会“逐步”减速或最多微弱减速，从而维持目前公司利润增长率预期的可能性正在下降。现在预计2007年的公司利润增幅将接近10%。摩根士丹利(Morgan Stanley)认为，上周下调收益预期的公司有所减少，但尚未出现明显的触底迹象。
就在基准指数逼近一个重要的关口之时，市场也突然开始普遍关心起经济增长的风险来了。
标准普尔500指数上周初交易前距离5月份创出1325.76点的5年高点只有不到半个百分点。该指数周一逼近了这个水平，并在周三和周四一度突破1328点，但在上周其余时间，卖盘则占据了上风。道琼斯指数没有同样逼近5月份时的高点，这主要是受部分高价周期性成分股下跌的打击，如卡特彼勒公司(Caterpillar)和联合技术公司(United Technologies)都下跌了4%左右。
这种起起落落让市场一直保持在让人充满希望的位置，目前它距离牛市时创出的高点仍相当接近，但市场动力较夏季中期从低点反弹时已有所减弱。在此轮升势中，大型股指数的表现更好一些，这同以前的反弹走势形成了反差。
投资者的人气在前几周极度低迷，市场的上涨甚至让人们不相信这是真的。看涨的人气现在已有所恢复，不过仍远未达到热烈的程度，原因之一可能在于对9月份季节性疲弱走势的讨论过多。不过从短期来看，人气仍为中性，并未达到能引来不容错过的反弹的程度。
声称人气处于中性状态可能是个借口。不过很多情况下的表现基本是中性的：只说不动、趋势性不明显、区间震荡。看跌的技术派人士认为目前正处于“双顶”走势中，而也有人认为地区性银行类股创出历史新高表明跌幅有限。
本季度还剩下最后一周，参差不齐的公司利润消息将不断公布，还有更多的房屋数据，至少有6位Fed官员将在不同场合发表演讲。这可能为重新评估投资者仍普遍持有的看法──增长将会减缓但不会陷入衰退，因而股市在最终安全地软着路前不会出现更大幅度的下跌──带来足够多的依据。
Michael Santoli
