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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: michael97123 who wrote (48883)	7/9/2001 10:56:17 AM
From: Jacob Snyder	Respond to of 70976

re: fed funds rate cuts vs. semi cycle: comparing forecasts.org and siliconinvestor.com Notice the different time scale. AMAT stock price is proxy for semi cycle, as AMAT tracks SOX closely. AMAT troughs in late 2000, 1998, 1996, 1990. In the last 15 years, there have been two slowdowns in the U.S. economy, corresponding to two sharp Fed rate-cutting events: around the last recession in 1990, and now. There really aren't enough data points to decide if there is a correlation. The Fed cuts rates when the economy slows, and all stocks (including AMAT) go down when the economy slows. But AMAT goes down at other times as well, when there is a supply/demand imbalance in the chip industry. Occam's Razor says: no correlation. However, IMO, going forward, there is going to be a closer correlation, because chips are increasingly going to be in all consumer products, whereas through the 1998 trough, chips were mainly in a single item (PCs). So, demand for chips will, IMO, start to track with the general economic cycle, which in turn is connected to changes in Fed Funds rates.