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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Earlie who wrote (71253)	12/1/1999 11:48:00 PM
From: Earlie	Read Replies (4) \| Respond to of 132070

MB and Gang: In September, I surmised that "if we manage to slide through October, we'll likely experience a "relief rally" of considerably proportions". I also suggested that the markets would then likely sail through the year end without serious erosion, and that the really ugly time frame would arrive in the late winter. So far, so good, but a few ominous signs are causing this "hiding in the weeds" bear to consider a bit of pre-Christmas foraging. Herewith some observations that are causing the re-think at this end. - the standard Y2K worries (no electricity, no running water, etc), will be quickly buried, but a secondary (and very negative)consequence of Y2K thinking is likely to emerge very quickly after Christmas, that being the truly staggering amount of "stockpiling" that has been quietly going on across many U.S./Canadian business sectors. (Check out inventories in parts and sub-assemblies). Inventories are going to have to be quickly brought back into line. This is going to cause a BIG slow-down in the effected sectors. Reckon on at least 2 quarters of nasty revenues for affected companies. Put in layman's language, many sectors have inadvertently been forced to pull year 2000 sales back into 1999. The "comparisons" next year will not be pleasant. - Truck traffic (one of my favourite general economy indicators) really notched up dramatically this summer (which provided the impetus for a dig into the causes). It may be just beginning to sag,.... which is unusual, given the season. I expect it to plunge quickly in the new year ("back load" pricing is already softening). I note that big rig sales are already sliding. - Housing is (finally) starting to slow. Too early to call this definitive, but combined with stalling mortgage applications and reduced building permit applications, it's a worrisome indicator in the "don't worry - be happy" season. - Christmas sales are not going to be "barn-burner" this year. Yes, some retail chains may produce improved y-o-y numbers, but much of this will be as a result of the disappearance of big players, and not because of improved over-all sales increases. - In the PC sector, Fred's "nuclear winter" is unfolding pretty much on schedule. Corporate sales are minuscule, and retail sales, while brisk, are dominated by low end activity. Inventories are at silly levels, so I expect an escalation of already nasty price cutting. No one in this game will make money (except through accounting practices) this quarter. - As others have pointed out, the buck is in trouble. The bond vigilantes continue their admirable job of filling in for Greenspan, while he babbles about a "neutral stance" (pure baloney, given the requirement that a big interest rate differential be maintained to keep the treasury tidal wave off shore). Alan has no alternative but to increase rates again, probably right after Y2K fades as a worry (check out the swap rates). Reckon on at least a quarter point increase in January and more shortly thereafter. - Net stock mania will likely end quickly after Christmas. A large percentage of net companies have raised big pots of money,.... all of which is being spent on Christmas television advertising. (As noted in earlier posts, a huge problem for net retailers is making buyers aware that they exist). A tiny few will survive, while most will evaporate VERY quickly. Wall Street will be unforgiving of those companies that "blew the wad", especially where sales revenue growth is anaemic. A "target-rich" environment for bears is just over the horizon here. I also suspect that as this mad sector takes the torpedo hits, damage similar to last Summer's cremation of the day trading mob is probable. A market as precariously stretched as this one is, may not be able to weather a similar shrinking of the wealth effect. Best, Earlie

To: Earlie who wrote (71253)	12/2/1999 10:38:00 AM
From: Knighty Tin	Read Replies (2) \| Respond to of 132070

Earlie, Nearly every corporate reseller has pre-announced down revenues and eps. Then, with retail sales off big time (which even surprised me, and I'm a bear), this is beginning to look nasty. Now we know why Hewlett-Packard is announcing that it is an E-Service co. <VBG> And Bill F. is reporting that Mikey Dell's visits to tout-a-thons have been somewhat underwhelming this week. And if that carny barker is not trying to get you to buy a ticket to the Egress, you know things are tough.