ERG, MB, and gang:
Have been on the road a great deal lately, primarily as a result of the markets telling me that what I've been observing in the field since Christmas could not possibly be accurate, which is an unfolding disaster. The recently completed trip just added to my conviction that a disaster is indeed unfolding, but of course the market still thinks the world is beautiful.
Four points summarize the situation as it currently appears to this observer, based on a good deal of field work.....the P2 is selling poorly, PC inventories generally are off the graphs, business has learned that a $1,000. PC does everything they need it to do, and very few retailers of PC's are making a decent profit.
It has been very discouraging to systematically assemble a great deal of field data that confirms this situation, yet watch the markets totally disregard this reality......... AND THEN CAME INTC.
A little touch of irony.......late this afternoon, I compared notes with good friend Fred Hickey. In passing, I noted that I expected Intel would have to "warn", and that I thought it would be soon. Fred held an exact duplicate view. I don't think either of us thought it would occur within the hour.
The madness of this last several week's run-up in stock prices, even as Asian problems have mounted and even as the PC sector has slogged ever deeper into the "saturation swamp", is not something any of us will ever likely be able to explain, except in terms of "a mania". Be that as it may, tomorrow morning's wake-up call is going to be interesting. I wonder what pure drivel will be mounted by CNBC to explain this one away?
This quarter's preview period is now underway. It is starting early, and it is starting out ugly. I expect it to continue to unfold with a powerful negative bias. Time will tell if this market can be influenced at all by deteriorating fundamentals. I suspect that this time, the results will be sufficiently brutal, that even this mania will suffer heart palpitations. In a way, it will not matter in any event, as Asian deflation is spreading and will overwhelm this market's delusionary viewpoint in due course.
Best, Earlie |
