Hi Amy, re: what is this economic stew we're in here?
Your choice of terms is excellent! This is indeed a "stew", the likes of which has never been cooked up before.
I do believe the move of assembly and test offshore has been a major contributor to the hurt placed on domestic houses. That, coupled with the economic downturn, has been a disaster for such firms.
We were headed into a general recession before 9/11. We had been in a manufacturing recession for some time prior to that. I believe the recession really began around Feb. (just MHO). My cloudy crystal ball says that we would see the end of the recession around Q1/Q2 2002 (given FED actions, etc.), IF the rest of the macro environment remained stable. Of course, this environment is far from stable now, so all bets are off :-(
However the "mystery meat" in this stew is the question of how the public and the markets will react to ongoing acts of domestic terrorism and also to a protracted war on a global scale (I'm talking about many years in many countries ... this won't end in Afganistan by a LONG shot).
In a nut shell, I don't think anyone knows. Not Mr. Greenspan, not any of our favorite analysts. If anyone pretends to have the answer, I would doubt their veracity.
Mr. Market HATES uncertainty, and we've got uncertainty in spades. I would expect the market to mirror our own turbulent emotions until the US and the rest of the world starts to return to some kind of normalcy. The big questions are: What will be the definition of "normal" once the world has returned to some kind of stasis, and how long will it take to reach that point?
I guess I've got as many questions as you do, Amy, and not many answers. I'm sticking with my market investments in companies that should be strong, once the political macro environment improves. Is this smart? I just don't know.
Kind regards,
greg |
