As usual, Les comes up with good articles on his thread, and his latest is written by a "bear".
Message 19356316
A portion of the article addresses the "semi area" so a couple of snips are shown below.
<<WASHINGTON, Sept. 29 (UPI) -- Conventionally, there are thought to be two routes to escaping from economic depression: pumping up the money supply and boosting public spending. Unfortunately, the Bush administration and the Fed have now carried both about as far as they will go, and last week's economic statistics suggest the U.S. may still not have escaped depression's clutches. So, if depression or deep recession sucks us in again over the next year or so, what to do next?
Make no mistake about it: the economy may look superficially strong, but the undertow towards decline is ferocious. U.S. consumer spending in the last few weeks has been weaker than expected, at a time when the consumer has been blessed with record levels of mortgage refinancing, followed by a very substantial tax rebate. It is likely that the fourth quarter's retail sales and consumer spending figures will come in much weaker than those to early August, at which point economists' attention will turn once again to business investment, supposed by now to be pulling the U.S. economy out of the mire.
U.S. business investment, however, is not showing the strength that many had expected. While world semiconductor sales were modestly strong in August, according to figures released Monday, the overall trend of the last six months has been weak, with the SEMI book to bill ratio consistently below 1. Since information technology equipment is the area in which business investment can be expected to be strongest -- there is still, I think, an overall secular up-trend in IT's share of the economic dollar, and the temporary surge in investment due to the Y2K nonsense has now been entirely absorbed -- the lack of a stronger upturn is damaging news for business investment and the economy as a whole.>>
<< Most important, the stock market has risen sharply this year and remains at a level that defies rationality. An article in TheStreet.com last week detailed Cisco's share repurchase plans, that have devoted the company's entire cash flow since 2000 simply to keeping the number of shares outstanding constant in the face of massive stock option issuance. This demonstrates that for even the strongest companies involved in the 1990s tech boom, funny accounting continues to play an all too prominent role in reported earnings, so that price-earnings ratios, already high in nominal terms, are in real terms astronomical. I have forecast several times in the past that I expect the Dow Jones Index to go to 5,000 before companies are reasonably valued, and the S&P 500 Index to 600. I remain of this view, and believe that the initially gentle slide towards these levels began last week. The continuing U.S. trade deficit of $500 billion per annum, now joined by a Federal budget deficit of at least that amount, are further evidence that the present situation, and present level of stock prices, is wholly un-sustainable.>> |
