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(March 8, 2002) FINANCIAL INSTRUMENTS: INTEREST RATES--Treasuries have sold off sharply over the past few sessions as data reported by the various factions of the U.S. Administration foment ideas of reversals and a return to "happy days" in the corporate board rooms. Recent questioning of various major corporations CEOs in Florida negates the positive enthusiasm as a "mystery" to them. Mr. Greenspans remarks clearly became the "straw that broke the camels back" as relates to the interest rate picture. Since the first "glowing" reports of February 28th emanated the bond and note prices have declined and obviously changed the characteristics of the market. Those who were long were forced to liquidate longs on protective stops and are only awaiting the next round of economic data before taking action again. Some traders were influenced by the stronger than expected labor market data but in retrospect the unemployment rate dropped only one tenth of a percent and is still at the 5.5% level with some sectors in major U.S. cities showing upward of 9% and higher, unemployment rates. As is usually the case, the "positive spin" on the unemployment rate by analysts who had "forecast" an increase from 5.6% to 5.8%. Their "miscalculation" on the negative side prompted the selling whereas had they forecast a decline to 5.5% it might have proved to be a non-event. Analysts have become, in my opinion, an unnecessary evil as relates to their mis-interpretation of the data while had no assumptions or "guesses" been made, the public would have all found out the data at the same time. I personally prefer no "guesses" whether they be proven correct or not simply because of the ramifications of such "misguided" analysis. While clients were "pushed out" of long positions, I would still suggest that the recession is not over and will not be until people get back to work so the Treasury market still appeals to me from the long side of futures, or call options. As I have stated in prior commentaries, "unemployed consumers do not consume anything". The data showing that non-farm payrolls rose by 66,000 was a negative factor for bonds but notwithstanding the fact that it showed a "change", it was a "drop in the bucket" in comparison with the jobs lost over the past year or so. Look for a place to buy bonds or calls.

John L. Caiazzo

www.acuvest.com

E-mail: futures@acuvest.com

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