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News flash!


This is going to be a wild day no matter how you slice it. For those wondering about the corporate profit outlook, we heard that things are not so great from Intel (INTC) in their mid-quarter update after the close yesterday. Add to that clear indications of imminent military action from President Bush last night and you get a recipe for a weak opening. Ok, but that was yesterday - what do we have today? The all-important employment report, which showed a less than stellar economic landscape followed by the upcoming presentation on how Iraq hasn't done what was demanded but is beginning too. Frankly, I think Hans Blix took presentation lessons from Alan Greenspan.

In the vein of finding new and interesting ways to look at the same thing, I would like to take this opportunity to announce to the world that my good friend and new partner Brian Reynolds has decided to join the Kirlin team as Fixed Income and Economic Strategist. Brian was a big time Fixed Income fund manager in Boston and graduated from Harvard. It looks like I am going to have to learn some bigger words. Seriously, the readers are going see through me how Brian has the unique ability to make every class of investor (and trader) understand what is happening in the economy, and as a result the Fixed Income Market. And that has just an itsy bitsy impact on equities.

Let me pass along his thoughts on the employment report just released:

February payrolls fell 308,000, well below the consensus for a gain of 5,000. Even after accounting for an upward revision of 42,000 to the January data and the subtraction of called-up reservists from payrolls, it was a weak report. The weakness was spread across industries, and the index of aggregate hours worked, a measure of output, fell to a cyclical low. Bond traders responded to the weakness in the report, initially pushing the price of the benchmark 10-year Treasury up from a little more than an eighth of a point before the number to a gain of nearly a half-point immediately after it.

From a longer-run standpoint, employment remains sluggish, and this report raises new fears of further weakness. Employment fell throughout 2001, and has been flattish since then. If this were a normal recovery, employment would be well above 133 million. So, the economy remains well below par.

Clearly, it appears we are entering the part of the current decline that may line up the intermediate-term technical indicators for a more significant and sustainable rally similar to last July and October. Stay tuned, because I am watching for that like a hawk. The hawk is circling, but not ready to swoop. Have a great weekend.
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