Replies to post #111673 on Zeev's Turnips Patch-No Politics (ZEEV)

[Emptyhead]

Zeev

Maybe what many would have thought as a probable scenario for a move by late Autumn were discounting the markets of other nations. I do not believe this ramp is fuel with as much American earned greenbacks as with those who reside outside our nations boarder. The idea of the falling dollar only fuels foreign investment in our markets,they are simply getting more bang for their buck.

[orkrious]

here's a good piece on tech stocks. the market seems to be looking right through this:

AHEAD OF THE TAPE
By JESSE EISINGER



http://online.wsj.com/article/0,,SB105399137838758200,00.html?mod=technology%5Ffeatured%5Fstories%5F...



Tech Orientation

There are signs that SARS is penetrating technology stocks' immune systems.

During the next several weeks, a handful of influential technology companies will start to give midquarter updates. Semiconductor-equipment maker Novellus Systems Inc. is scheduled for Thursday, and the news could be unpleasant.

If you want to know what the future of U.S. tech companies holds, look East. In Asia, production has slowed sharply as SARS has slowed down the economy, inventories have built up and consumer demand for PCs and cellphones has fallen off drastically. For many tech companies, such as Intel Corp., Asia had been the last growth engine.

Nevertheless, tech stocks have moved up sharply this year, now sporting heady valuations. Applied Materials Inc. is trading at 105 times the estimates for fiscal 2003, ending in October.

Perhaps investors have determined that the threat of severe acute respiratory syndrome is past and are willing to look beyond a weak second quarter. But that seems complacent. We'll see how easy it is to ignore if bunches of companies start warning on earnings. Also, this could drag into the third quarter at least.

J.P. Morgan's Chris Danely wrote last week that "as a result of excess inventory and SARS, we believe most U.S. semiconductor companies in the PC end market will have to lower second-quarter revenue and EPS estimates, including Intel and AMD [Advanced Micro Devices Inc.]."

What are the ominous signs? Memory-chip prices are plummeting. PC inventories in China are at around 15 weeks to 20 weeks, compared with the normal six. The Taiwanese motherboard makers, which are a leading indicator of PC and semiconductor demand, had disappointing bookings in April, and May looks slower. Korean handset shipments fell more than 15% in April from March. That should put Texas Instruments Inc. squarely in investors' sights.

In the U.S., the April book-to-bill numbers flashed a warning. The reading was below 1, meaning there were more sales than orders. Orders were down from March and down 26% year-to-year.

Perhaps the bulls will turn to the argument that there will be pent-up demand when the SARS fear passes. It's possible. And after the stocks slink to reasonable valuations, they might be worth buying.

[orkrious]

here's a good piece on tech stocks. the market seems to be looking right through this:

AHEAD OF THE TAPE
By JESSE EISINGER



http://online.wsj.com/article/0,,SB105399137838758200,00.html?mod=technology%5Ffeatured%5Fstories%5F...



Tech Orientation

There are signs that SARS is penetrating technology stocks' immune systems.

During the next several weeks, a handful of influential technology companies will start to give midquarter updates. Semiconductor-equipment maker Novellus Systems Inc. is scheduled for Thursday, and the news could be unpleasant.

If you want to know what the future of U.S. tech companies holds, look East. In Asia, production has slowed sharply as SARS has slowed down the economy, inventories have built up and consumer demand for PCs and cellphones has fallen off drastically. For many tech companies, such as Intel Corp., Asia had been the last growth engine.

Nevertheless, tech stocks have moved up sharply this year, now sporting heady valuations. Applied Materials Inc. is trading at 105 times the estimates for fiscal 2003, ending in October.

Perhaps investors have determined that the threat of severe acute respiratory syndrome is past and are willing to look beyond a weak second quarter. But that seems complacent. We'll see how easy it is to ignore if bunches of companies start warning on earnings. Also, this could drag into the third quarter at least.

J.P. Morgan's Chris Danely wrote last week that "as a result of excess inventory and SARS, we believe most U.S. semiconductor companies in the PC end market will have to lower second-quarter revenue and EPS estimates, including Intel and AMD [Advanced Micro Devices Inc.]."

What are the ominous signs? Memory-chip prices are plummeting. PC inventories in China are at around 15 weeks to 20 weeks, compared with the normal six. The Taiwanese motherboard makers, which are a leading indicator of PC and semiconductor demand, had disappointing bookings in April, and May looks slower. Korean handset shipments fell more than 15% in April from March. That should put Texas Instruments Inc. squarely in investors' sights.

In the U.S., the April book-to-bill numbers flashed a warning. The reading was below 1, meaning there were more sales than orders. Orders were down from March and down 26% year-to-year.

Perhaps the bulls will turn to the argument that there will be pent-up demand when the SARS fear passes. It's possible. And after the stocks slink to reasonable valuations, they might be worth buying.

[mlsoft]

Zeev...

I think it is a mistake to connect the dots in such a way to think that the AG ramping has anything to do with politics.

A review of the history of the Fed would show that the Fed Chairman is not under the thumb of the presidency and George I/Greenspan is a good example of that fact -- it seemed that Greenspan was doing everything possible to get Bush I defeated. It was true then and remains true today that there is little (if any) love lost between AG and the Bush family so it makes little sense to think that AG is working hard to get Bush II reelected.

The real reason for the lack of presidential control is both the long term of the Fed Chairman and the fact that few (if any) politicians understand the workings of the Fed well enough to get involved. For the party in power, it has always sufficed to use the Fed as a convenient scapegoat when things go wrong and take credit for it when things go well.

Greenspan is on his own agenda, driven both by a genuine desire to do what he thinks is best for the nation and by ego - not wanting to go down as the worst Fed Chairman in history by first creating the bubble then sending us into a deep and long lasting recession. He is probably telling the administration more of what he is doing and why than he tells the public, but he is probably sugar coating the dangers somewhat. The administration, for its part, is glad that he is pumping as hard as he is and is helping with the jawboning as much as possible. Few of these people are idiots and they know what will happen both politically and economically if the Gambit fails.

As for M3 not growing (and the velocity of money slowing to a crawl) despite the massive pumping by Greenspan, I believe it is because the money being pumped in is going to the markets rather than to the economy. There is hardly any loan demand at all and until that demand starts to increase the Fed will be unable to inject money directly into the economy. Unfortunately, loan demand will not increase until capacity utilization increases and the debt of both the consumer and corporate America has been brought down to manageable levels - that will take a good while, I fear.

mlsoft