Hi Medroogies, <<Fed's role has only had about 6 months>>
… the market took in the first 50 basis points, spat in Greenspan’s face, anticipated many additional cuts (at least I, by my posts, anticipated many cuts), and yawned, and so it does not follow that …
<<SOME effect … apparent … still too early>>
... we are not talking about a pipe line of cuts, all lined up, ready to demonstrate their effects; we are talking about business folks fully able to anticipate an upturn due to any FED easing, if they in the aggregate in fact believed in the magic of such easing and the resulting upturn.
I suppose one reason for the lack luster capex spending could be that the long bond yield by which investments should be funded are holding very steady, risk equity capital dried up, VCs took up hobbies, and there is a glut for both installed capacity and manufacturing capacity, with demand moderate to weak, depending on sector.
Alas, therefore, instead, these anticipatory business folks are firing staff, cutting back spending, asking for more cuts, and selling down their shares. What do you suppose the business leaders are anticipating? Recovery? Any interpretation not in line with the cold logic of observable actions may be dangerous to our NAV, as was the case a few months ago when we last discussed the merits of FED, tech and ORCL.
<<the beginnings of moderation are apparent. Indeed, in many sectors, the tide has turned>>
… we must be reading very different publications and talking to very different set of folks. But, that is already obvious.
<<The market itself isn't going to blast off>>
… correct.
<<Should it set new lows...I'd change my view>>
… It appears that you are an economic observer, and not an anticipatory investor. For investors, seeing is too late.
<<ORCL, I don't think that a 40% increase from lows is "not gone up">>
… Just about every counter, chip and stock is up from the lows, which is when we were having our conversation, and for ORCL’s rise from $15.85 (March 23rd) to its current $ 20.00 ($15 on June 15th), investors are supposed to play this counter for their financial health? NEM did better (low was lower and high during this interim was higher), if people wanted pure gambling.
<<showing strong signs of growth in quarters that are not typically its best>> by cutting price pretty drastically, and cutting cost some more, and then cut … they got their script from the Maestro.
<<As for psychology, it should've really plummeted by now if things were truly bad>>
… nothing to worry about then, because things are then of course not truly bad, at least not yet.
<<However, consumer confidence remains considerably bouyant.>>
I agree, and therefore when the crunch comes, it will be worse than it would have been had the Maestro not cut and encouraged even worse balance sheet disciplines.
<<The key to long term moderation and growth of the economy is now left for a final event to occur: consolidation.>>
Yes, there will be consolidation, due to the weak getting weaker, until they can no longer stand up on their own, and then kicked over by the slightly stronger, have their treasuries raided, staff fired, and bondholders shafted, and finally, in the long term, shareholders nailed. Consolidation is typically not a bullish impetus for employment, balance sheet, credit rating, management time.
<<CPQ, among other companies, has set aside a large sum of money to make acquisitions.>>
CPQ vs. what other companies … DELL, GTW, SUNW …? Keeping busy not making profit due to ever dropping prices and slack demand?
<<As more companies do this, individual markets will stabilize and profits will begin rising again>>
Consolidation due to economic crisis is a different flavored consolidation from what took place during the bull market. Not sweet.
But, as I said in the previous post, I am happy to let the market resolve our different view on matters.
Chugs, Jay |
