To: Tatnic who wrote (134 ) 10/24/2000 12:35:36 PM From: quasar_1 Read Replies (1) | Respond to OT: Bedtime Reading… In my opinion, earnings aren't as important as interest rates, but they do give a reading of the economy's overall health. Still healthy and doing just what the FED wanted...i.e, growth is slowing somewhat. That's good. The problem here is that while its true that higher oil prices are an indication of a healthy world economy (from increased demand), if they stay at these levels for too long it will put a halt to this world-wide recovery in a heart beat. Most of the third world's economic growth is still very much dependent on oil. I believe we are seeing signs of a stumble already. It doesn't take much to kill a fledgling recover. the banking sector does poorly in a rising rate environment and will start looking good at the first hint of rate cuts by the FED. But they are not a slam dunk prediction machine. Rising interest rates raise costs for industries that rely of borrowing , can contract P/E multiples and can have an effect on consumer demand. But these effects can be more than offset by other factors. Why have retail sales remained high during periods of 'high' real rates, falling stock prices (reverse wealth effect), and very high consumer debt? This is a very complex economic model that doesn't lend itself well to simplistic evaluation. This is the main failing of the popular media—leading people to the simplistic solution.The problem now is that no one knows for sure when or if the FED will cut. As for the bond market, the FED's intervention has thrown that all askew. in not a problem right now), rising oil prices notwithstanding. How can that be? HD's profit warnings are the beginning signs that housing is slowing somewhat. But remember, thats what the FED wanted to happen..put a damper on the run-away economy to head off inflation. There were run away stock prices from the greed driven buying panic. I don't believe what the Fed said. They were trying to bring the market down because they thought we were entering a bubble. They were right about the .coms and some of the nifty fifty tech stocks. They were also terrified of the wealth effect as it took away their control of the demand side through interest rate hikes. Not such a bad thing. As for the whole brick and mortart distribution being in a state of chaos, preliminary stages of chaos. I would tend to think that brick and mortar is much better off than etailers such as amazon et al. Those are the retailers that are in a state of chaos and desperation, not the traditional brick and mortar bunch... '73~'74 was a pretty desparate time for this country. Ugly bear market. I also believe that alot of people got pretty mangle this year... and that you won't see as much money being thrown at the market. Certainly the net stocks are not going to attract the great gobs of speculative money that they did in recent years. That's gone. I hear this text book mantra all the time...i.e., that oil prices are meaningless today because we are in a new economy where oil isn't as important. This is such BS. Everything is still dependent on oil. EVerything you see in your office or the stores or anywhere for the most part is still dependent on oil. The biggest difference between present day and 25 years ago is that we have become so much more efficient in our consumption, but at the same time we are getting bigger and bigger so the net change in consumption keeps going up, not down. Never mind us, the third world is desparately dependent on oil and oil prices since they are even close to us in energy efficiency. They will fold up shop if the prices remain at these levels for much longer. At some price oil costs can cause recession or depression. I don't know where that is and I suspect neither do you.I disagree with your reasoning behind the Euro's weakness. Its not that complicated to figure out if you've ever been there. Its a simple matter of business. Look at all the weak, business hating, socialist countries in the Euro. France and Italy being the worst offenders. There is no way in hell the Euro will ever amount to anything as long as those socialist countries are members. That's why Great Britain has resisted joining them. Why would a great, capitalist country want to dilute their "stock" with a bunch of socialist? They are clinging to industrial age economic principals while the world has dramatically shifted in front of their eyes. What will happen is that many companies will fail not because of global recessions, but because they fail to grasp the competitive truth. This is the main reason Europe (Euro) is failing. Lot of fluff there....can you translate that? The smaller amount of companies that remain will be incredibly prosperous. They will in essence become world corporate states. They will rely on the small entrepreneurial firms to take the risk, while they aggregate the winners into their massive global enterprises. The small companies that succeed will be moon shots. The rest will be buried or absorbed into the matmos. Compete? ARe you joking? The US is the clear leader in all that is business. We are the envy of the world. Do you see many US engineers and scientist flocking to India to look for jobs? US software jobs going to India and Eastern Block countries right now. The labor costs are much cheaper and the talent pool is very well educated.How bout France? We are and will continue to be the magnet for all who seek a better life and better opportunities. The real long-term question is can we continue to grow our economies and quality of living without completely destroying our environment. That's the real challenge facing the world in my opinion, and that will be a good place to look for some interesting growth companies now and in the future.
