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Strategies & Market Trends : Paint The Table

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To: MulhollandDrive who wrote (17856)	3/6/2002 4:04:47 PM
From: John Pitera	Read Replies (1) of 23786

Even though the underlying financial situation is improving...(ie paying down debt) that doesn't necessarily translate into earnings growth The underlying financial markets have improved as seen by smaller credit spreads, but it's not about companies paying down debt; at least I don't think that's the most significant aspect. Credit spreads are what credit market investors create. You've got the very big smart investors like Bill Gross's PIMCO, and all the other institutional bond managers, evaluating fragilities and default concerns in the Macroeconomy. This situation has gotten much better since late 1999. we saw over 150 companies go into bankruptcy in 2000 and 267 in 2001. Those were the weak fragile companies. Or at least the most eggregious of the unviable companies. Many of the Enron's, WCOM's, WInstar's, KMART's have been flushed out and so the companies that are left are in better shape. Also remember that costs have been cut considerably at many companies and so profit margins can expand in an economic pickup. But I'm on record as much as anyone that we could see a double dip towards year end. We'll know more as we come into the summer. John

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