Yeah! Great view. I'm really diggin those boxes.
Short and sweet from Comstock...nothing to argue with, economy is in deep sh*t. Period. Nothing else to say. We're going to see the unemployment four week average start to accelerate, and retailers aren't going to hire for squat this year to try and somehow salvage the bottom line from what is shaping up to be the worst Holiday season in years.
Economy Melting Away--Market At Great Risk
We believe that a previously stagnating economy is now turning downright ugly and that the market has not taken this into account. September semiconductor equipment orders fell 19%, the second straight decline after eight months of increases. The book-to-bill ratio dropped to 0.84 from 1.02 in the prior month. This was the lowest ratio since January and the largest monthly decline since April 2001. Confirming Intel’s recent statements, chip manufacturers are slashing capital expenditures in response to sluggish chip sales, and the outlook for the period ahead is poor.
In addition the ECRI Weekly Leading Index declined sharply, and is now at its lowest level since last November. When we add in the two consecutive monthly declines in industrial production, the September drop in employment, the failure of auto sales to respond to increased incentives, sluggish sales at even the fastest growing retailers, and the weakening labor picture, it becomes evident that the already anemic economic recovery is in danger of slipping into renewed recession. Whether this would be considered an extension of the recent recession or an entirely new one is academic at this point. The key issue is that the S&P 500 is selling at 28 times 2002 estimated earnings, a ratio that would not even be justified by a booming economic recovery. With the economy melting away like ice on a hot day, we believe that the market is at great risk for another severe downleg very soon.
-dave |
