Steeny, I see your points. Here are my thoughts:
1) I am 60-40 on a raise. The hawks want their 25 back. Don't really feel like going into detail. I think you know.
I have no problem with 1/4 point increase. It is already factored in.
But, if the world is still on the incubator and the purpose of Oct 98 interest rate decreases was to save the world, with the world recovery just having hatched, how will the Fed justify now cutting off it's milk? Ergo, Fed may not cut rates.
2. I disagree strongly about AOL Europe. It is by far the weakest part of AOL.
They are not leaders in Europe and they have been bumbling over there from the get-go(just the name AOL reeks of a lack of European understanding). Merrill warned about this last week.
I am not worried about Europe. I just came back. PCs and the net are still RARE in Europe. The web market in Europe is still too small to be significant. There is no money in Europe. Furthermore if AOL gives out a free ISP and go for content, the free ISPs in Europe will be dead because they don't have the advertising muscle of AOL.
AOL is a good buy if you think the high PE dump is over. It's not a question of whether AOL is solid or not. It is a question of whether the mkt can tolerate AOL this far ahead of itself. I am not convincd the mkt can tolerate these PEs for an industry that is growing at about double the rate of MSFT, yet 5x the PE.
I do think the high PE dump is over because interest rate fears are overblown. Let me state that Merrill is one of the few who think that
there is no inflation. At most they see .25% point increase.
Ultimately we are going back to Paul Allen's idea that the web is all about content. As 17+ mill AOL customers demonstrate, AOL has the content/e-commerce, whatever, AOL anywhere.
Let us also not forget that ATT with cable will not be able to be everywhere.With AOL instead if a customer leaves his home he can still be in touch with his home site with all th evarious connections that AOL is planning( copper, wireless, and cable. ( remember, we have companies like Qwest, Global Crossings who have an excess of cable and are now trying to buy the bells because the bells have the customers
because copper telephony is more reliable than cable,
TA
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