December 2002 starts with investors feeling better about their portfolios than they have in a long time, thanks to the markets registering 8 straight weeks of gains. However, I don't agree that we're in an "end-of-year" rally, at least not one that will last the whole month. Like diners who forget a mediocre meal because the desserts were fabulous, so, too, have investors forgotten that December often starts well, then reverses, before finishing strongly--often not until the last 3-4 days of the year.

Take the last week of November--Thanksgiving week--for instance: Most investors probably think of it as a terrific week because of the 228 point DJIA gain (over 40 points on the NAZ Comp) registered the Wednesday prior to Thanksgiving. They'll gladly ignore the small decline that ended November on the day after Thanksgiving. Few realize, though, that the DJIA finished up only 90 points on the week, the NAZ only 11. It's the stunner that arrived Wednesday that holds the most surviving memory.

Last year, after an awesome post-9/11 decline, the averages rocketed back steeply but stalled on December 5^th. This year, there's similar potential thanks to the convergence of a number of events before the 8^th which could result in an early part of the month climax that's followed by profit-taking or something more disturbing.

Notable on the 8^th, is the U.N. deadline for Iraq to submit an inventory of materials and weapons programs. Since inspections to date have yielded nothing but friendly, welcoming Iraqi's, ya know the inspectors are playing hide and seek and cold as hell. Saddam and his minyans keep insisting they have NO programs or materials of mass destruction. So imagine, if you will, what will be submitted to the U.N. on the 8^th. Nothing! Nada! Who in the world is going to believe that? Donchya think the war rhetoric, which has subsided since Iraq submitted to unfettered inspections, is going to ramp up after the 8^th?

That will arrive just as two holiday traditions arrive: earnings warnings and tax-loss selling. We'll agree that there should be far less selling that need take place this year than in past years: few investors have gains to offset and, given declines in the averages earlier in the year, ya gotta figure some losses have already been booked. Still, procrastination is every man's inalienable right: tax-loss selling will take place--as incredible as that seems. As for warnings, I'll venture we should see far fewer than we've seen in the past, thanks to both low expectations and a muted seasonal uptick in business, which companies and analysts had pretty much abandoned in their models. Still, ya know there's never been an earnings season that wasn't preceded by warnings--NOT EVEN in 1998 and 1999.

As for trade shows and conferences, they grind to a halt by mid-month, so there'll be little good news generated from those quarters. Big analyst meetings? Most of them are over early in the month, by the 8^th, to be precise--the holidays put everything on hold, after all. Even one of the past annual events the third week of the month won't take place since GE already held it's analyst meeting in November and raised it's dividend, departing from a multi-decade schedule of holding off until the 15-18 of December.

So what's left? the weekly retail sales and unemployment numbers. With many of the newly unemployed about to derive from Wall Street, as year-end reviews ramp up, the mood won't be exactly festive. You'd can't be surprised that surviving analysts aren't looking through rose colored glasses when colleagues are being laid-off in droves, and "sell" recommendations are chicer than "buys," at least until Analyst-gate is over. Meantime, embarassing e-mails keep surfacing and, after being criticized for remaining bullish way to long, the new groove for analysts is to downgrade based on "price" or "valuation." The recent rally provided the circumstances for that to take place. Additional gains will only intensify the debate.

Then there's something NO ONE else is talking about: the FOMC meeting on the 10^th. What if? What if , thanks to such a robust rally and the slightly better economic data that's spurred the optimism that fueled the rally, the FED moves from neutral to a tightening bias--alerting the Street to the fact that the last half point cut was an emergency cut--awarded with plans to take it back as soon as the "soft patch" seemed navigated. If the markets are anticipating better times 6-9 months hence, shouldn't the FED? Isn't it the FED's mandate to maintain price and employment stability? Dya think members of the FOMC are going to sit idly by and let the markets anticipate a recovery without the voting members responding? Worrying about inflation--the irony, since it was only weeks ago that deflation was all the rage.

As is often the case, in December, the majority of "analyst" meetings will be with tech companies--mostly the mid-quarter update variety. The majority of conferences/trade shows will be of the pharma/biotech variety--concerning specialties like Hematology. What's missing? The leadership necessary from the financials, which right now, as I write, are subject of one of the best orchestrated campaigns to make "them" pay, even as the audience has tired of the drawn out prelude and is restless for the curtain to fall, already.

As for the last few days of the month, when stocks have often mounted the notorious "Santa Claus" rally, let's dispel some myths: first, it refers to a rally that starts AFTER Christmas, which often runs into the first few days of the new year; second, it's most often been characterized by a rise like the phoenix in stocks most beaten down by tax loss selling--often small caps. If ya don't think there's gonna be much tax-loss selling, this year, then ya shouldn't expect a tremendous Santa Claus rally, either. The latter is a function of the former.

As for the monthly data that will be released throughout, don't be surprised or get overexcited if it's better than prior months. On the contrary, multi-month declines have traditionally been followed by a bounce-back month. I don't think we'll really know if the bear has gone back into hiding until March, or April of next year--don't think we'll know if the bear can be banished for another bull run until we see how things play out in Iraq. George Bush is determined to dethrone Saddam Hussein, and by hook or crook, I'll think he'll find a way. That means I think war remains nearly inevitable. Until war becomes unthinkable, I won't flash the all-clear sign.

In sum, I think we're up the first few and last few days of the month, with some air pockets bound to create downside turbulence in between.

And so it was in the market, in October: As earnings warnings gave way to a spate of decent, if not outstanding, earnings reports, traders and some investors were smitten. The initial attraction caused shorts to cover, elevating the energy and magnetism, drawing momentum investors to puppy love's intoxication. Lost in the euphoria were a slug of pretty disheartening economic statics--the least of which was the employment number. Confidence fell, consumption fell, manufacturing contracted, vehicle sales cratered, retailers failed to meet plan, the dollar took a nosedive--the kinds of warts one overlooks in the first throes of puppy love but not over time.

The market is looking to the FED to cut rates on the 6^th but, after 11 rate cuts that may have saved the economy from depression but did little else, what is it, exactly, that investors think yet another cut will do that eleven before failed at? Never mind I don't think the FED is cutting this month--that I think the FED will acknowledge the weak recovery but choose to pass since, as the Chairman has repeatedly maintained, there's sufficient liquidity already in the system.

So let's assume the FED doesn't stand still and, contray to my belief, cuts rates again. (And suppose a cut comes? Haven't ya noticed what's happening to the dollar? Don't ya think global investors would take another cut as an admission of American economic weakness? How will that boost equities?) And let's assume the ridiculously packed schedule of investment conferences and trade shows bring fewer earnings warnings than they did in earlier months--especially since the meetings are top loaded early in the month since Thanksgiving arrives later. Can you really believe there won't be warnings? Are you forgetting that, unlike prior quarters, the 4^th quarter is front-end loaded, since business rarely gets done between Christmas and the New Year? Who was it, exactly, that reported strong earnings--at least relatively strong earnings? A few key companies: Microsoft, Clorox, IBM, General Electric, American Express, Electronic Arts--not early cycle recovery businesses like the chip makers which, nonetheless, rose the most; not Intel; not most of the banks, which should be maikng money hand over fist since they can borrow so cheaply while still lending high.

Take still photos--remember how good it felt to see your portfolio vaule rise, for a change, thanks to the October rally because I feel sure it will prove mere puppy love, not the real and lasting thing--not once earnings warnings start hittting the tape--not once economic data can't convince traders another rate cut is imminent, once Wednesday has come and gone since the next meeting isn't until December 10^th.

No question about it: Earnings reports saved the markets. By the time a few companies didn't miss estimates by as much as some feared they would, when other companies reported decent earnings, the averages were oversold enough and deserved a boost off unnecessarily depressed levels. But that's not what makes a bull market. Bull markets are built on expansion--an expansion in earnings, an expansion in investments that fund an expansion in the number of businesses, an expansion in investment that funds new ideas that create new businesses that fuels hiring and more spending. While we may be at the bottom, there's been absolutely no evidence of expansion, maybe even only uneven evidence that the bottom has already arrived. There's been little evidence of anything but a few winners outweighed by the greater number of businesses still suffering contraction--still cutting jobs, still shuttering plants, still pushing back or canceling new plants--still renegotiating employment contracts downward and contemplating more lay-offs.

At mid-month, COMDEX, one of the great tech shows of the past, will convene. What's the new killer app that's going to be unveiled to fuel demand? What's the hot new product that's going to be introduced? Zippo! The tablet PC, you say? Uh-huh! That introduction is scheduled for November 7^th, nine days before COMDEX meets but, anyway, is that your idea of a killer app or product? Remember Newton?

But the Anti-trust suit against Microsoft has been settled, you say? Has it? Will the nine states A.G.'s really just give up? And suppose they do, dya think one person sat at home longing for a PC but passed because of the suit? Dya think one corporate IT manager worried about the enormous budget he/she hadn't spent all year because he/she was waiting for the anti-trust issue to pass? Dya think one company cancelled a new factory because the DOJ and Microsoft issue wasn't settled? Dya think one company's P.R. department elected not to send a contingent to a trade show because the anti-trust suit was pending? Dya think the boys in Afghanistan, or those readying for Iraqi duty think they'll be home for Christmas because a judge left a previously agreed to settlement largely intact? Are your health or property insurers likely to lower rates, now, because those issues are settled? Will Eliot Spitzer suddenly leave the investment houses alone because the anti-trust issue is settled? Dya think there won't be more write-downs or restatements because Microsoft was let off the hook? Dya think demand will suddenly return because Microsoft will be hosting one hell of a celebratory annual meeting the first week of the month?

Where are demand and pricing power--hallmarks of expansion. Dya think demand and pricing power willl return because the market averages have recovered better than 10%? Dya think the overcapacity issues in telecom dissolved because STM Micro rallied 70%? Because Infineon doubled during the October rally? Because PMC-Sierra rose 29% last week, alone? Because Lucent tripled to uner $2 instead of less than a buck?

Dya think markets keep rising at an 11% a month clip if fundamentals aren't catching up? Dya think fundamentals are about to improve by 11% a month? Why not look at the single datapoint that rose better than 11% recently? Existing homes sales. Now overlay the graph of refinancings on the existing homes sales charts. Wanna know why? Cause every refi involves a "closing," and it's "closings" that get counted to derive the existing homes sales numbers. Has control changed? No. So does anyone who "sold" their own home to themselves paid a commission to a realtor who'll now go out and spend it? Does anyone who "sold" a home to themselves feel a need to update the walls, carpet and appliances? Not usually, though in years past, that's what people used home equity loans for and plenty of homeowners are opting for those, as a way to extract equity from their humble abodes. Wanna know what I think is the most bogus datapoint around? The existing homes sales numbers cause, around here, there's no inventory under 450K, while inventory above 800K is largely getting marked down and sitting anyway. Around Atlanta, I hear, existing homes aren't even getting lookers. I recently heard someone from Short Hills New Jersey say the same about her neighborhood, even as prices got slashed. But trust me, a lot of your neighbors have been serial refinancers, selling their "homes" to themselves by refinancing. Zero financing sold a ton of cars in the last year--but suddenly, during month 13, even zero, zero and zero didn't help: Sales declined by 30% from last year's levels.

While I still accept that I can’t look into a crystal ball and foresee the future, it seems equally ludicrous to avoid forming at least some opinion about the future—to avoid setting goals for the future. Otherwise, why lose weight, exercise, lower cholesterol, marry, have children, go to college, or do anything beyond deciding that only tomorrow will come, for now? And, oddly, I reach this crossroads even as I’ve been mired for two years in a period of my own life when it appears EVERYTHING has gone wrong—from the merely inconvenient--like three of four windows in my daily auto not opening; to the life transforming--the collapse of my marriage after discovering evidence that my husband had been after nothing but easy street, at my expense; to the life threatening—filling a prescription for painkillers and later, after experiencing damage to my heart muscle, learning I’d be given amphetamines, instead. With all that’s gone wrong, I met each day, one at a time, challenged to naviagte each 24 hours, without taking any time to think about how I wanted my life to look after the problems were behind me.

With these thoughts as background, I’m using the October Monthly Outlook to look at both the month and beyond, as I now visualize it—with the proviso that I have no crystal ball, no ESP, no inside track or proprietary information beyond that which is available to everyone, if they’d only read as much as I do, study history as much, connect the dots as much—my oft mentioned habit for seeking how the hip bone is connected to the thigh bone, which allows me to form deductions that others overlook.

So first, and straight away, lest there be no misunderstanding, I’m back in my bear cave for the near-term. At a time when the country looked forward to healing, to gaining some perspective on the senseless deaths caused by terrorists, the White House decided to talk war and bombs and "getting" a leader of another country. Mind you, it’s not that I don’t think our economy is healthier than it looks from the market averages, or that our resolve or fortitude has diminished, it’s just that I don’t expect the corporations which have avoided long-term or expensive capital investments to suddenly open up and switch into spending mode, while a war with Iraq is pending.

Second, I harbor no doubt that Bush will not be deterred from war but, rather, fear the war Bush envisions is not the one he will get—or, more rightly put, it is not the one that will be met by the boys and men sent into Iraq. This is NOT Kuwait’s Gulf War redux. Hussein has always shielded himself behind women, children and, particularly, the feeble in hospitals. He will not simply lounge by the pool at his palace, waiting for the bombs to drop. Unlike in Kuwait, where the enemy’s armed forces, sitting in the desert, amassed on a border, could be bombed away, along with its financial pipeline, Hussein will, along with his elite troops, take cover in hospitals, in orphanages, in places that preclude a widespread air attack. Hussein and his troops will position themselves in places that will require that U.S. troops march in and engage in near hand to hand, door-to-door comabt. This is NOT a military strategy our armed forces were trained for. It is NOT the war the US military budget has bulked up for, with it’s stealth aircraft and missile guided smart bombs. The international community will not sit idly by and allow our missiles to be guided to the destruction of hospitals and orphanages. Will we win, anyway? Of course, but at what price to our sons? And at what price to the exposing of the weaknesses and foolishiness of our military and "espionage intelligence?" At what price to the cost of keeping our factories, homes and cars running? If you’re a CFO deciding whether you can invest in a new machine, or whether you might have to tap that budget to pay for the higher cost of electricity in the event of a war, do you buy the equipment or husband the budget, just in case?

Third, I think the at least the perception of, if not the economy, will continue to weaken as long war is threatened rather than declared, or at least until the nation becomes innured to the talk. So the turn in capital investment I once expected to start after 9/11 hasl been postponed. Tell me when the war will start, and I’ll tell you when the economy will regain some buoyancy. Until then, enterprise spending will remain on hold. The holding pattern is likely to lead to more lay-offs, more declines in consumer confidence, to worsening preceptions and lower markets.

The good news remains the consumer, who has often said one thing and done another. Therefore, no matter future declines in surveyed confidence, and even should unemployment increase, the rate of unemployed will still remain at historical low levels, and consumers will keep on spending—even if it’s not quite with the exuberance we’ve seen in recent times.

I also think it’s possible that Bush will start dropping bombs before the election, this month, since he must certainly be coming to the conclusion that the support he seeks is dragging , and must certainly believe that only a win will prove him justified. Do I think he wants to win before the election, in November, to rescue his party? Yes, I do, but I don’t know enough about war to know whether his military chiefs can place all the puzzle parts in place in time to start so soon. I’ve heard some say the pieces are already assembled in the right places but don’t know the veracity of those statements.

Luckily, I know some of market history, and for all the markets’ reputation for October crashes—what led me to coin the phrase Octobophobia, over a deacde ago—the market crashes of October have more often than not created the turning points that led to multi-month, or multi-year advances, which makes October both the month of crashes as well as the month that launched many impressive recoveries.

The other thing I know is that the government is the nation’s biggest single spender and, whenever this month a federal budget gets passed, the G-men who control the departmental budgets will go on a spending spree and, as it should surprise no one after many informational lapses that might have contributed to the terrorist attacks, technology that improves the flow, datamining, inter-agency comunication, and correlation of federal information will be high on spending lists, allowing some recovery for one of the pillars of our economy—technology. Once the government orders start coming it, it's suppliers will place orders, and little by little, word of an uptick in demand will filter out, and others will fear allowing competitors the edge, and start placing orders, too. As we've seen, it doesn't take much for a little good news to spark a rally.

Another thing I know is the calendar, and the Supreme Court’s session, which gets underway this month, could alleviate some issues overhanging the markets, with respect to whether companies whose products included asbestos bear any liability along with the makers of asbestos, and whether the FCC erred in auctioning NextWave’s specturm licenses, and should return the rest of the deposits collected from various telcos. (Can you imagine a strengthening in telco balance sheets, and the funds that may be freed for capital investment?)

Farther out on the calendar, despite the many surprises and loop-de-loops life has thrown at us over the past year, Thanksgiving will still start with the Macy*s parade, Christmas will still be celebrated. These dates which spur certain spending patterns will arrive, come what may regarding war, lay-offs, and other obstacles— whether expected or not. Consumers may spend differently, this year, may even spend less (though that’s rarely innate in our DNA), but spend they will, for the same reasons they’ve always spent during the last two months of the year. So there will be winners in the retail space, even if the names of the winners are not the same as they were in the past. (Memo to Gap Stores and it’s new CEO, who praised current merchandise: GPS will not be one of the season’s winners, unless it’s holiday fare is dramatically different from current merchandise.)

Last, I believe the issues facing this nation and the markets, as I do with my recent troubles, shall pass. The nation, like me, has a future--has reason to keep lowering cholesterol, going to college, falling in love, and looking forward to funding it’s future with stock and capital investments--reason to keep on planning for life beyond tomorrow, for life beyond today’s setbacks and troubles. For that reason, I maintain my longer-term optimism that the economy will improve, and with it the markets. Not tomorrow (though I think there could be some recovery the Monday after I post this, 9/30/02, as is typical after outsized declines and/or on the last day of the month and quarter).

© Sandi Lynne 2002 Nothing contained in this commentary should be construed as a recommendation to buy or sell any security.

 
EARNINGS WARNINGS DAMPEN MOOD
SEPTEMBER 2002

Most analysts, especially technicians, annoyingly tell ya if A happens, then B will, but if C happens than D will. I've always tried to avoid that kind of flaptrap by surveying the upcoming days and weeks, then formulating an opinion that I put out here, right or wrong. It's tempting to say we're going down from now until September 11, but if we don't, then we're going up through September 12, after which September will live up to it's reputation by seeing the markets move to a down finish for the month. Problem is, the quarter underway didn't go well for many companies. Retail sales flagged a bit. Automakers had to re-up the incentives to get customers back into the showrooms. Europe found itself, quite literally, underwater, which made an already notorious slow/vacation month a total disaster--again, quite literally. Parts of the US suffered a drought, while other sections, like Florida, recorded record rainfall. Worse, yet, the markets suffered for five months straight, sapping more "wealth effects" out of consumer spending, even as the costs of insurance and filling the family SUV rose. Meantime, multinationals, already suffering European floods saw the dollar mount a mini-rally, cutting the Forex benefits that boosted Q2 earnings.

So while recent data has improved from the July trough that gave rise to worries about a double dip recession, corproate profits are still lagging expecations--both those offered months ago, as well as the more recent revisions. Investors might think comps are easier, given the economic halt that the near year ago terrorist attacks triggered but that jumps the gun. Post-terrorism cardiac arrest took place only from 9/11 until the end of the month. The first two and half months of the quarter in '01 were stronger than they were this year, yet this is the second half that was supposed to see the strength of recovery. That clearly isn't happening. WIth mid-quarter updates on the September calendar, investors will soon learn the truth--earnings warnings still dominate; expectations are still too high and, therefore, stocks are likely to continue moving down whether the markets see a 9/12/02 rally or not. Need I remind anyone of what this past July looked like despite the enormous July 5^th rally? Is there reason to suspect this month will look much different?

Surprisingly, I do expect business to pick up this fall. I do think there is some pent up demand, a little of which is tied to "what if?" anniversary psychology. keeping orders on the back burner until the anniversary is passed. But the benefits of a fall pick-up won't be seen until the 4^th quarter and, probably, won't be spoken of until the post-earnings conference calls associated with the next earnings season that won't peak until the third week of October.

The one nearly certain piece of good news for September is the OPEC meeting on the 19th, at which it seems likely production will be boosted a smidgen--though given Venezuelan and Russian cheating, it's more likely OPEC's acknowledgeing higher production than any real boost. Besides, oil is pricing in the possibility of a US attack against Iraq, which could trigger withheld oil from Iraq-friendly countries, like Iran, that's pumping U.N. sanctioned oil but probably cheating by transshipping oil to Turkey or other countries.

So, having gotten the broad strokes down, let's examine more specifics. The first week of the month is a week shortened by both the Labor Day holiday and an early Friday exit, thanks to a major Jewish holiday that starts at sundown. In the meantime, the week brings monthly data like vehicle sales and the August Unemployment Report. The trade show calendar is most notable for more than a half dozen investment conferences, including Lehman's Energy/Power CEO, SSB, SG Cowen, CSFB, and Kaufman conferences on Tech, Software and Communications. As if that weren't enough, Prudential offers a Back-to-School Consumer Conference--that's more about what goes into the lunchbox, While Wells Fargo presents the "Class of 2002," a hodgepodge of tech, retail and manufacturing, while Merrill Lynch hosts Financial Services, while CFSB also mounts an Asian Tech Conference. All of them will likely take a back seat to Intel's mid-quarter update, on the 5^th, which doesn't promise much good news, based on comments attributed to CEO Barrett, when he spoke late August in Asia.

Now, you might be thinking that nine is an awful lot of conferences for a short week, and you'd be right. (And remember, these are investment conferences in addition to the usual complement of trade shows) Seems the investment houses maintained their bullish 3^rd quarter outlooks right up until the last minute and, rather than cancelling conferences, decided to go for it anyway. (Who says it's only retail investors who haven't, yet, adjusted to the new reality?) Problem is, Reg FD has been translated by companies into press releases in advance of management presentations, so it seems inevitable that the first warnings are likely to come just as soon as September kicks off. Heck, Lehman took the lead by downgrading the entire Energy and Power sector to neutral while keeping it's conference on the schedule. Just for illustration, I counted up the number of companies presenting, ex-Kaufman, since I didn't have it's presentation schedule yet, and I came to 629 companies scheduled to present, meaning 629 likely Reg FD-complying press releases. Suppose only 5% warn? That would still total some 30 odd warnings in a short week, and those are likely to reverberate loudly.

You'd think, after the first week's schedule, things might slow down but you'd be wrong. Remember, summer is when investment conferences go on hiatus--the fall has always been when the schedule picked up--especially because IPO's used to, as well. So consider the first week just a beginnig: The Investment conference schedule doesn't lighten afterwards. So happens, the trade show schedule is lighter this month than it's been in any September before but, instead of cancellatioms, the shows that used to be in September were rescheduled for October and November--two already busy months. As it is in most months, the September trade show schedule is heavily weighted towards tech and telecom, as well as biotech and pharmaceuticals, though there are a smattering of less common shows, like Lumber and Gaming.

Other notable days include September 16^th, which will be another thinly traded day, thanks to the Jewish Holiday, Yom Kippur, while the 20^th is an always volatile Triple Witch. There's another FOMC meeting on the 24^th, so while we're talking disappointments of the earnings warning variety, let's also mention the likelihood that the FED stands pat on the 24^th--if nothing exogenous happens before the meeting. That clearly was the message delivered by both the Fed banks members out speaking since the last FOMC meeting and the Chairman's assessment when he spoke in Jackson Hole.

Now, if the potential for a disappointing earnings warnings season weren't enough, we'll probably see increased mid-quarter updates during September, as we did in June, this year, with more unappetizing news like we got from Sun Microsystems and Novellus at the end of August. With summer over, the SEC, New York AG, and Federal Prosecutors are likely to ramp up indictments and prosectutions related to corporate malfeance. Then, add in Congress' return to session, and the fact that November brings mid-term elections, and you can just imagine what the congressional investigative sessions will sound like--not to mention the usual election politics, that should see each party going out of it's way to make the other party look worse, in the process pounding the drum on economic problems, especially unemployment and the, once again, skyrocketing budget deficit.

So, with companies, politicians, the SEC, and other legal eagles pounding home the multifarious problems facing the country--most of them economic--it's hard to imagine investors finding the silver lining that could inspire investments. Then suppose, the official but still unfunded Homeland Security Agency revivies it's litany of daily terror warnings--even as Bush and Cheney retiterate their arguments for a war against Iraq, and you can appreciate the possibility that investors might one to just stay home and lock the doors, while stuffing the cash from their paychecks in their mattresses.

Yet, I can find a silver lining: the more excess that's rung out of the markets, the more attractive stocks will look, until, someday soon--before the fall is over--stocks will be so attractively priced, and companies will have so completely wrung out excess, investors will find good reason to put their hard-earned money back into stocks.

While we're talkin black gold, OPEC meets the 15^th but has already said it's not inclined to boost production for the rest of the year. Of course the head of OPEC is from Venezuela, and given how they're hurting, they need their commodity to stay high, go higher, cause that's paid in dollars only, which buys a lot of local paper.

And speaking of the 15^th, it's a triple witch OPTIONS expiry that's rarely kind to the bulls.

Leisure benefits from seasonal travel, a condition boosted, this year, by Easter falling in late March. And while we're talking Easter, though retailers often pullback a little, after a big run in February that coincides with the retail/apparel reporting season, that Easter is a big shopping season--sort of the official kick-off for buying spring wardrobes.

The FOMC meets on the 19^th but it's all in their post-meeting statement, often referred to their "bias," because Greenspan spoke at the House in late February and said there are no hikes on the horizon. Speaking of Greenspan speaking to Congress, he returns for the sequel on the 7^th. But no one will hang on every repetitious word because it'll be so much more fun to listen to the media and pundits speculate on February's Unemployment Rate, due out on the 8^th.

COMDEX is the first week of the month but that conference has become decidedly passe. There are no breakthrough products on the immediate horizon. Another wireless home networking product or MP3 player ain't gonna do it. Far bigger is CeBit, in Germany, but what's the hot product there? Beats me! I'll mention the MSDW Semi & Systems Conference, the 4-6 but only because Novellus did so much to trigger the rally that started the month. Lots of telecom events to ignore. The group is on life support until further notice.

Tons of biotech events to choose from but the group often pulls back after huge January and February runs. Well, the group didn't really run, much, this year, except in the trading range equivalent of a dog run. Seminal even for the month could be the European approval of Johnson & Johnson's coated stent.

A couple of BIG media/entertainment conferences locally, and in London might help those groups, given how low they fell and the improved advertising psychology after the Olympics turned profitable. March Madness (college basketball) oughtta help some more, along with awards ceremonies galore.

I wouldn't be surprised if the most interesting event is the Game Developers conference, in San Jose, on the 23. With XBOX and GameCube now released around the world, the cycle for new video games has only reached the third inning.

National Manufacturing Week might be the add-on to the really favoable ISM released on the first, which gave a read of growth after two years of declines. (Institute of Supply Management, formerly Purchasing Managers' Report), Whadda shame there's not likely to be the same result from the service ISM, released the first week of the month.

Should I mention that Hewlett and Compaq shareholders vote on the merger on the 19^th & 20^th? What? Your office doesn't have a betting pool going?

Need I remind everyone that March is a BIG earnings warnings month? So typical of Oracle, and it's leader Larry Ellison, who needs to be first, to be the first out with a warning on the first. Top that Scotty and Lou!

February has traditionally been the month when the retail/apparel sector has outperformed the general market after a nasty post-Thanksgiving correction that accelerated into Christmas and the New Year. Didn't happen this year, so it's hard to imagine the group will just keep going. Yet, it seems that's exactly what consumers are doing--buying vehicles like there's no tomorrow even after zero financing ended. Then, stores aren't advertising much because inventories are remarkably lean. But remember, Kmart blamed their collapse on a pull back in advertising and, while KM had problems all it's own, consumers are used to discounts the stores just aren't advertising.

Tech has often corrected after huge runs in January but that didn't happen either. Biotech was a traditional best performing group in January and February, but that didn't happen either. Will Gebruary be the time? Are we waiting for Godot?

The SuperBowl starts the 3rd, Olympics run for two weeks starting the 8, while the All Star Game sneaks in on the 9^th, featuring the un-retired Michael Jordan. So what's the play? Beats me! Time was I'd have bought Sportsline, and I did buy FOX, as the alternative to the Olympics but neither of those look especially healthy.

Tech takes center stage opening week of the month, with the Goldman Sachs annual Tech conference, though Cannes, France offers some competition, this year, with MILIA for interactive content which includes video games.

Other tech events include NDSS: Internet Security (6-8), DV Conference (10-14) for digital Video, as well as Call Center & CRM starting in Vegas on 11^th. for the fight between all the big software companies which have outperformed hardware. eTail in San Jose (11-14), with only 20 participant companies—reflecting all the .com demises. A GSM World Congress in Cannes, concurrent with National Wireless Forum in Texas, (19-21) are just two communications events. The 20^th starts CLECexpo, ASPcon and the rest of the comm alphabets, in NY. Intel hosts a Developers’ Forum (22-28), at which new chips are often introduced. ETA, Entertainment technology executive summit runs the gamut from games, to HDTV to Interactive TV, sort of a US Milia, with XBOX debuting in Japan on 2/22. How will it do against Playstation2? New Tech! American! Big winner. BEA Systems developers conference (24-27) coincides with the Compound Semiconductor Outlook

In healthcare and drug development, there will be Immunity, Stroke, Asthma, Angiogenesis in Cancer, Molecular Biology/Heart, Anti-Body based Biopharmaceuticals, Orthopaedic Surgeons (analysts suddenly fall in love with Zimmer), Geriatric Psychiatry, can you say Prozac, Zoloft? Human Genome Project, S.F., (25-27), Santa Clara, which says right off the focus is the Technologies needed to make genomics pay off, Gene Functional Analysis is in Santa Clara but it’s part of Genome Tri-Conference, which runs into March. The Association of Health Plans meets in D.C., (25-27); the group’s been on fire so long, yet I’ve given up waiting for it to cool, which probably means it will as soon as I stop watching.

For less typical events, there's a Builder’s Show (8-11) in Atlanta, Toy Fair in NY (10-14), and KidScreen (marketing to kids thru entertainment). Truck Stop, Convenience Store, and Snaxpo, Chicago, (16-19), could give salty foods pro, PEP a boost. Petroleum Week, in London, starting the 18, and only for 3 days—but who’s picky? comes at a time when the energy sector often starts sagging until the Memorial Day weekend sends 'em on another spurt. However, a couple of good snow storms would bring life, at least temporarily. Word is, the agreed production limits are being held to pretty closely, so a spike in demand would create sizable draw-downs. Rental Association—of the Rent-all tools, equipment & party supply variety (18-21), meets, then Magic is in Vegas.

Options expire 2/15. There's a Holiday 2/18, which means treasuries will close early, again, on expiry. An all new event is the Aviation Security Summit, in D.C. (10-21). Everyone off with their shoes!