Jewish World Review August 18, 2003 / 20 Menachem-Av, 5763

Neil Cavuto

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When good news goes bad


http://www.jewishworldreview.com | If things are so bad, why are the economic numbers lately looking so good?

I think it's because they are good, but many of us are convinced they can't possibly stay good. What else could explain the ho-hum reaction to wave after wave of better than expected economic statistics that clearly point to an improving economy? And I'm not talking just some errant number or two. I'm talking a whole slew of them; not in some industries, lately in all industries.

Take retail sales. The pessimists say we're not shopping. Apparently they're wrong, because apparently we are. The Commerce Department says such sales climbed 1.4 percent in July from an upwardly revised 0.9 percent advance in June. Now a lot of that was strong auto sales, but even leaving them out of the mix, sales still rose nearly one percent . . . close to double the gain even the optimists were counting on.

What could possibly make media and market types ignore good news like that? To hear my friend Greg Hymowitz, who runs his own hedge fund, tell it, the fear it won't last. "There's a good deal of concern about momentum," he tells me.

For the life of me, I don't know why, because I see a lot of momentum. I see corporate spending sizzling again. In the latest quarterly report card on the economy, business spending surged a startling 7 percent. Another government report showed growth in the services sector, the strongest since July 1997. Leading economic indicators have advanced three months in a row. Businesses are hiring temporary workers at a staggering rate, nearly 42,000 in July. Generally that's a good precursor to full-time hiring.

Gosh, everywhere I look, I see news that was supposed to be bad proving surprisingly good. They said the backup in interest rates would kill the housing boom, then I see housing starts last month surging 3.7 percent.

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I see inventories that are low that have to be replenished, and workers who are super productive, who have to get help. Where others see a collapsing economy, I see a coiled spring. I didn't just think that. Numbers clearly tell me that; numbers like simple sales reports that show more than simple sales gains at places like Wal-Mart, Kohl's, J.C. Penney, Gap, Best Buy, and on and on.

Clearly we're all a little gun-shy with this economy. We've seen technology stocks that looked unbeatable prove very beatable, and new paradigms that more than pooped out. It's understandable to be wary, but it's now bordering on the wacky. Quarterly profits just released handily beat estimates, and most companies gave good guidance for the future . . . not all, but most.

It's one thing to be leery about losing money. I argue it can be just as dangerous failing to see the potential of making money. Brave were the souls who dipped into the markets after the October 1987 stock market crash. Then too the experts talked of a likely "multi-year bear market," that would crunch good and bad stocks alike. They were wrong then, of course, but the majority of investors as a result took a conservative course. They missed out until the gains were substantial. Many did all right. But many could have done better.

I'm not smart enough to know when the next bull market storms. But I am smart enough to know it doesn't put up a green light. Sometimes, it sends out a lot of little lights . . . little lights that show some light on an economy that's improving and fortunes that could be improving all the more . . . if only we take the time and courage to notice.

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Neil Cavuto is managing editor of Business News at FOX News Channel. He is also the host of "Your World with Neil Cavuto" and "Cavuto on Business." Comment by clicking here.

Up

08/11/03: I'VE GOT YOUR NUMBER!
08/04/03: PHONY BALONEY!
07/28/03: The meaning of a pin
07/21/03: We are what we eat
07/14/03: Don't like it, don't keep it!
07/07/03: The check, and the recovery, is in the mail!
06/29/03: Who says Al's our pal?
06/23/03: The big pitch for the "big get," no big deal!

© 2003, Neil Cavuto