MB:
Just a quick scan before settling into a heavy work period. Probably won't be on net for a week, which is too bad as I think this coming two weeks is going to be very interesting especially in the tech sector.
The market is going to have to ignore/rationalize a broad-based collection of nasty numbers coming out of Q4 and also a bunch of extremely worrisome telephone conference calls (barring complete fabrication, which could occur), as analysts query 1999 expectations.
The big problem for the tech sector, as noted earlier, is that big overhang. Intel and AMD massively over-built micros in Q4, (in response to the box builders' individual hopes of stealing market share from each other in Q4 as a means by which a crummy year might be rescued). Our estimate is that the over-build exceeded by ONE THIRD the actual micro requirement. Most of the selling this Christmas was at the bottom of the price spectrum, so guess who has an inventory problem (not AMD).
The question for some of us has been, "Did the box builders actually produce boxes for each of those micros, or are they in somebody's inventory (box builders, spot market or micro producers)?" Most of my info points to finished boxes, although for Intel, it really doesn't matter, as that company is not going to be able to ship much new product until that Q4 overbuild is soaked up at the consumer/business PC purchase level. It amazes me that the analysts don't seem to understand this situation, at least not yet. On second thought, perhaps they do, but don't want to bring it out into the open. (g)
In spite of what the Etraders think, the whole PC/semi sector is in much worse shape than at any time within its entire history. They cremated the computer stocks at the turn of the decade and conditions then were a picnic compared with today's mess. What the heck happens to stock prices during this year as an actual decline in UNIT sales, (which is an inevitability even without a recession) occurs?. No wonder the insiders are selling everything that isn't escrowed or pooled.
That the tech sector earnings are already beginning to cave in, is a given. The problem for the bears is trying to figure out both when this earnings collapse will become so evident that even a corpse would see it, and to figure out when the e traders (who, on the evidence of yesterday's trading, now control the market) retreat. It may be awhile yet, as they have to be badly mauled before they will cease to be a potent and unthinking bullish force irrespective of earnings results. On the other hand, with the transpiring events in Latin America, the whole darned thing could collapse in a nanosecond. Time will tell.
Best, Earlie |
