VOLTAIRE'S PORCH-MODERATED Message Board

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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED

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To: Voltaire who wrote (17806)	11/19/2000 2:55:18 PM
From: limtex	Read Replies (2) of 65232

Vol - I want to be a believer again but I'd like to see a reasoned response to the way through these sky high intrest rates coupled with an abnormally high oil price. Either of these two are enough by themselves to crash the economy, combined they are lethal. Unless and until at least the interest rate is reduced by a material amount we are going to see the evidence of perpetual and continual slowing. This will increase as the recessionary effects spread out to ...Europe and Asia and we will get a chain reaction as the reductions in business activity magnify themselves. Back at the ranch we will see exactly what we have been seeing namely profit warnings except more of them and reductions in expectations and of course sooner, much sooner than later reductions in P/Es. And as we discussed yesterday....downgrades. Downgrades which cut the legs from under a stock in an instant. Upgrades, few and far between in this climate will cause very little upward effect and neither will good news or indeed good or even specatular earnings. Only the best of the best the creme de la creme will maintain their ratings and P/Es. Everything else might as well be privately held. I believe that the above are now firmly in process. The real question is whether the recession will be a short duration one or whether it will be one of the once in a lifetime types that will last over 5-10 years before any kind of recovery occurs. Vol - I blieve thats what Mr G will take us to. He just wasn't comfortable with 7% growth, ultra low inflation and low unemployment. forget about super productivity gains he is old school and they understand unemployment and recession as the only way to reduce expectations. Best regards, L

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