Thanks Haim,
If you are correct than a 15% - 30% drop in earnings would produce a fair value of 580-630, pretty dire. What makes you think there will be such a drop in earnings? Decrease in demand, decrease in prices, or both?, Remember, If this does come to pass then bond rates will really tank. This reaction would prop up the market to some degree, and also increase demand as interest on business loans, mortgages etc. drop. Makes getting leveraged (mortgages, loans etc.) look pretty attractive.
I agree on the autos. They are really hamstrung by global capacity. I think unit demand is ok, they just can't price and have to give incentives. Other industries in the same boat include DRAM companies, Hard drive companies and motor homes. I think some of these companies will go belly up, but this is not, as far as I can see true in all sectors.
Karl
Karl |
