Some quotes from a Friday afternoon Merrill Lynch report on the economy:
"With economic growth weak and the factory utilization rates sitting at a recession like 78%, the idea that prices will accelerate this year is laughable... How anyone can worry about inflation when commodity prices are so depressed is beyond us. The CRB spot industrial index is currently at a 14 year low..
Why not worry about stagflation? First, because much of the increase in the PPI and CPI was either temporary or fluky. Second, and more important, inflation is a lagging indicator... Within a few months we will probably see deflation concerns mount".
They see us close to a short term bottom in the Naz, with a March - April counter trend rally (making comparisons to last spring when we hit a slightly lower low before recovering), but no real recovery until Q4, when profits should start to recover. Still, they can't bring themselves to stop reiterating their "BUY" recommendation on BRCD, for instance, saying basically that they think $35 and a PEG of .56 could be the point of capitulation, but on the other hand "At a PEG of .56, we think that we're there, but do believe that patience will be rewarded". |
