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Non-Tech : QQQ - Nasdaq 100 Trust

QQQ 611.67

-1.9%

Nov 6 4:00 PM EST

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To: johnd who wrote (609)	7/22/2001 10:01:51 PM
From: HerbVic	Read Replies (1) of 840

The drag on the QQQ (IMHO) is the slowdown in capital spending due to a profit recession. The profit recession was triggered by excessive bull market capital expansion creating a gap between production capacity and consumption where capacity leads consumption. Hence, the inflation is in the production side of the economy which leads to deflation on the consumer side which leads to profit recession. Historically, slowdowns in capital spending have lasted for years, not just quarters. But, never before has the Fed been so aggressive so quickly. There is no historical precedent for the current profit recession in which the Fed didn't play a part in dragging out the effects of the slowed economy. Before capital spending returns fully, the market will have to digest the excesses of the past. Sectors will consolidate. Companies will make acquisitions of their weakened competition when their managements perceive the need to expand. By the time we see it on the balance sheets, the turnaround will be already in place. That's why I say watch the M&A activity. Once that picks up, recovery for the QQQ is at hand. JMHO, HerbVic

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