Zeev's Turnips Patch-No Politics (ZEEV)

[JMKel]

This is another "double dip" forecast. It seems that there is a contigent that believes that the demand will falter in the economy and that earnings will therefore fall.

For this "double dip" to happen the consumer spending is going to have to fall and possibly capex spending will have to fail to materialize.

We have already had a YOY quarterly expansion in earnings across the board of about 11%. Some companies like Intel have seen their profits climb 144% YOY. Last year was pretty bad earnings wise. Christams sales grew YOY but not at their usual pace. Auto sales remain strong. Companies like GM and Intc have achieved new operating efficiency. Intel's revenue growth is due to marketshare gains.

The semiconductor industry association has forecast a 20% increase in revenues this year. They have also stated that a recovery is now underway. The book to bill ratio is now 1.28 which is pretty good. We will see if it is sustained.

There is some early evidence of an expansion in capex spending and consumer demand should remain strong for a while with all the refinancing going on and new home construction and sales.
That portion of the economy should be maintained throughout the coming year.

So the key issue is when will we see a increase in demand and capital equipment expenditures?