Well here is another female guru's opinion on the market plus Bill Gates' view on the wireless future.
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Message 13775277
Market has more room to fall
Garzarelli says invest in corporate bonds
By Frank Barnako, CBS MarketWatch
Last Update: 4:13 PM ET May 24, 2000 Also: columns & opinion
Listen to the interview
NEW YORK (CBS.MW) -- Money manager Elaine Garzarelli says the stock market still has further to fall. Garzarelli says the Standard & Poor's 500 Index is still overvalued by at least 30 percent.
In an exclusive interview with Frank Barnako, Managing Editor of the CBS MarketWatch.com Radio Network, Garzarelli urged investors to look at corporate bonds and undervalued sectors, like household products and beverages.
CBS.MW: What's up with this lousy market?
Garzarelli: Well, there's a problem, and that is that the stock market is overvalued. The S&P 500 is overvalued by about 30 to 35 percent.
CBS.MW: It's still overvalued after all this?
We've been in a bear market. If you took technology, biotech and wireless communications out of the S&P, the average stock for the whole year was down 6 percent.
Elaine Garzarelli
Garzarelli: Right. That's right. (Laughs.) And there are a lot of groups that are still overvalued. And the tech has come down quite a bit, but they're still overvalued by 20 to 30 percent, some of these groups, like instrumentation; it's 51 percent overvalued. Semiconductors, 35 percent overvalued. Chemicals -- and the reason is that they're going to have down earnings, probably some time in the next six to12 months, so I think that that's not in the stock prices yet. We're in a down market, basically.
CBS.MW: Is your characterization of a down market another word for bear market?
Garzarelli: We've been in a bear market, I think. If you took technology, biotech and wireless communications out of the S&P, the average stock for the whole year was down 6 percent. And now, the sections that have to correct continue to be technology, biotech, wireless and a lot of the cyclicals that did well last year, like paper, aluminums and chemicals, you know, up 50 to 80 percent last year, have to come down to reality.
CBS.MW: I was talking to a guy this morning who said, "I was going to sell at the open, but then it opened higher." And I said, "You know, it's too late. What are you worrying about?" Am I right?
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Garzarelli: Well, I think I'd be looking to shift sectors, if he would consider doing something like that, because there really are some undervalued groups that look excellent, and also, I'd be looking at corporate bonds. On the B-double A corporates, we can get over 9 percent now, and I think that's incredible.
Usually, the bond yield on a long rate will peak about one to two periods before the last tightening.
And also, some other groups that look excellent would be foods and household products like Procter & Gamble (PG: news, msgs); tobacco, like Philip Morris (MO: news, msgs); drugs, Pfizer (PFE: news, msgs). In the oil industry, we still have Occidental (OXY: news, msgs) and Phillips Petroleum (P: news, msgs). In the beverages, you have Budweiser (BUD: news, msgs); soft drinks, Pepsi (PBG: news, msgs) and Coke (COKE: news, msgs). And in the banks, America is still down over 30 percent. Natural gas and electric utilities all look excellent.
CBS.MW: Boy, it takes a stomach of iron to put any money into this thing right now, doesn't it?
Garzarelli: No, I mean, if you have cash sitting there, you're already in a money market fund, then I would wait until the Fed is finished tightening and we have some evidence that inflation is under control, because right now, with the next CPI, we're likely to see the rate of gain in the CPI year-to-year up again this year 3.5 percent. And producer prices had bottomed in 1998 at minus-3.3 percent, and now they're up to 6 percent.
And around the world, producer prices are up high. Yesterday, the CRB index hit a new high and it's starting to get into wages. So until we see a slowdown in the economy and some pretty good evidence that inflation is under control, then we'll know it's time to get back in.
CBS.MW: Do you think that comes by fall?
Garzarelli: It's hard to say. It depends on how fast the economy comes down. But election years are usually good in the last few months. The last election year -- the longest period when the market was down in an election year was 1960, in recent history, and that market started up right before November. So we should get a rally later in the year.
Elaine Garzarelli is a columnist for CBS MarketWatch. You can get more information at her Web site.
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Gates Tells Execs to Brace for Third Wave
Tech Web - May 24, 2000
May 24, 2000 (Tech Web - CMP via COMTEX) -- REDMOND, WASH. -- Without referencing the antitrust case unfolding in the nation's capital, Microsoft chairman Bill Gates opened the company's fourth annual CEO Summit with a wide-ranging, yet PC-centric, view of business technology's future.
Gates urged the business leaders to prepare for the "third phase of the Internet." This third phase moves beyond connectivity and simple transactions, and shifts into online services delivered over different kinds of devices, he said.
"The Internet is entering a third, rational phase, where the bottom line is technology and online businesses' needs will become increasingly interactive," Gates told the gathering of Fortune 1000 CEOs.
Microsoft (stock: MSFT) hosted the tightly managed event on the company's corporate campus here. The company would not disclose the guest list for the event, which was largely closed to the media. Reporters were only allowed to view the opening keynote on video from another room.
A press conference with Compaq CEO Michael Capellas, Autodesk CEO Carol Bartz, Virgin CEO Richard Branson, and Microsoft CEO Steve Ballmer was planned. A company spokesman said Microsoft and the business titans wanted private meetings to encourage open discussion.
The conference is concurrent with a remedies phase hearing in Microsoft's long-running antitrust battle with the Justice Department. The case was not mentioned.
Several leading executives are believed to be attending, including Warren Buffett, head of Berkshire Hathaway; Dell CEO Michael Dell; Worldcom CEO Bernard Ebbers; CBS CEO Mel Karmazin; Hewlett-Packard CEO Carly Fiorina; Martha Stewart Living Omnimedia CEO Martha Stewart; Qwest CEO Joseph Nacchio; and Walt Disney CEO Michael Eisner.
Gates' opening remarks spanned a wide range of topics and he reiterated several points he made recently at Networld+Interop 2000 in Las Vegas.
"We are transitioning from an offline economy into a online, digital economy," Gates said.
He talked about the growing "ability of software to be always up to date over the Internet," and noted that the technology is advancing quickly in this area.
"Microsoft's vision for this era is to stick to the same things we've done from he beginning: Provide software platforms that provide advances and solve problems for users across all of their devices," he said.
Among his predictions, he said mobile devices will go far beyond their existing functions, e-mail addresses will be unified, and business supply chains that have been paper-oriented will be Internet-oriented.
"Wireless technologies are really going to change how we think about the Internet," Gates said. "The fact that you have high-speed data connectivity will really change things a lot."
While giving a nod to e-books and PC tablets, Gates plugged the PC relentlessly.
"The PC itself is not going to slow down in any way," Gates said. "It changes every year very dramatically. Every year the PC keeps getting better. It always leads the way."
Instant messaging, voice-over video, and video conferencing will make communication on the desktop a richer experience, he said.
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Any comments?
Chisy
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