FSII - The Worst is Over? Message Board

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Technology Stocks : FSII - The Worst is Over?

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To: Joe Dancy who wrote (1701)	1/11/1998 4:07:00 PM
From: Donald Wennerstrom	of 2754

Today, I thought Tom Petruno in the business section of the LA Times had a great article. You can read it at: latimes.com I think it has a lot to do with all the turmoil in the stock prices lately. A good case can be made that deflation may already be here, or certainly that the economy is headed in that direction. The article points out that the Fed needs to make a sharp rate reduction (1 percent of more) in the very near future to prevent this possibility. One of the key quotes in the article is "... the Dow Jones industrial average slumped 4.8 percent... amid more signs that East Asia's economy is sinking - was that deflation isn't welcome if it forces companies en masse to slash product prices and destroy their profit margins in a bid to compete with desperate foreign rivals." Nobody seems to know to what extent profit margins are going to decrease in companies that do business in Asia and how it will reflect on their bottom line. Until they do, it probably will lead to a very unsettled and depressed semiconductor market for most companies.

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