Ian,
with all due respect to the great Abbey Cohen, I think she belongs to the camp that is under estimating the Asian problem. What troubles me is bullish comments about Asia are never followed by reasons, data and facts that substantiates that opinion. Being skeptical, the memory of Vinik promoting MU while selling is still fresh on my mind.
I would appreciate any article, be it from WSJ, Barrons or even the National Enquirer, that provides something other than generic statements such as "Likewise, she feels that the menace of the Asian economic crisis and the rise in the dollar have been overblown. The tilt of U.S. exports toward value-added goods and services makes them less vulnerable to competition on the basis of price and relative exchange rates. Too, such concerns ignore the many benefits that a stronger greenback confers on U.S. companies. Among other things, it lets them pay less for raw materials and semi-finished components sourced overseas. The bounding buck also allows companies to make advantageous foreign direct investments in overseas facilities and operations, which down the road will burnish the bottom line.".
As we all know by now, the above statement is totally false. Companies such as Nike, WDC, and Mattel, with manufacturing heavily concentrated, if not entirely, in Asia, have not benefited from the stronger greenback.
Further more, how common was it in the not too distant past that Asia was relied upon by US corporations for future growth. How long can the US keep up the growth rate while facing record trade deficits?
What is more worrisome may be the day that bulls like Cohen turn bearish, or just softens her tone, are we in for another huge drop?
Ramsey |
