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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: RR who wrote (58589)	7/9/2003 8:27:45 PM
From: Sully-	Read Replies (4) \| Respond to of 65232

NO. Still bearish. I'm not being a pessimist, I'm just looking at the big picture & there seems to be a disconnect between this market ramp & evidence of blue skies ahead. Even though the market is pricing in perfection for the next year or two, far too many economic indicators seem to show the 2nd qtr was not even close to robust. Manufacturing continues to shrink in the US (ISM still below 50). Unemployment is growing & the numbers of folks not even trying to look for jobs (& thus not counted as unemployed) is growing. Almost all 50 states will be reducing spending, cutting jobs & raising taxes since they cannot have budget deficits. I read of warnings (or in line guidance) from many large companies that still say there's no improvement seen going forward (economic, IT or Cap Ex spending). Almost no big names are guiding up based on improving economics. If anything, meeting or exceeding estimates is still being done due to cutting costs & cutting jobs that has improved their bottom lines. Some companies are guiding in line or even lowering forward guidance, yet their stock has gone up 35 - 50% since March (some tech's are up 150% & more). Heck, most upside guidance I've seen has been from small companies that are eating into established businesses, but not from global or US economic growth. We need to see significant top line growth just to justify current P/E ratios. Very few companies are growing revenues commensurate with the recent growth in their equities prices. Even fewer are projecting top line growth going forward that justifies it either IMO. Economists are predicting the 2nd half will see 3.5% or greater GDP growth, yet the real numbers keep getting lowered for GDP for the prior two qtr's (where these same economists had already been wrong with all too rosy estimates). There is still excess capacity that sits idle, much of it for years now. AG lowered rates for the 13th time, but banks almost immediately began to raise rates. Most big tech co's say they see no increase in IT spending or any indication of growth in Cap Ex spending. Sure AG made scads of liquidity available & cutting rates made even more money pour into equities. Does that mean equities are going to grow into these new sky high valuations? Look at current P/E ratios today. They are back to bubble levels again. At least during the bubble, we had strong economic growth & earnings growth replete with upside surprises & guidance each qtr, while equities prices ramped day after day. I see talking heads say the 2nd qtr doesn't matter (since it looks like we didn't grow in Q2 much, if at all).... it's about the 2nd half.... sounds like bubble talk to me. As I said, the market has priced in perfection for the next year or two, yet there seems to be a complete lack of fundamental basis or economic growth to support this, as yet, irrational exuberance in the equities markets. How's any of this going to spur economic growth? Today, YAHOO was seen as blowing away estimates & dramatically upping guidance. It's stock is up about 100% in the last 4 months. It's up almost 400% in the last 18 months. This performance is not unusual for many other big name tech Co's. YHOO barely met revenue & earnings estimates for the qtr & guided in line for the year. I fear there will be more reports similar to this for this qtr. Here is a partial list of not so positive guidance already out...... Most have sales in excess of $100 mil per qtr. - some exceed $1 billion per qtr. TXN already lowered estimates. INTC already guided in line. MOT already lowered estimates. YHOO guides in line The Semi's have had their growth forecasts slashed globally The Semi B-2-B remains below 1, with horrible sales. AA talked of no improvement going forward. EK estimates cut dramatically NCR we have 'not' seen an improvement in the economic environment SEBL lowered estimates - sales of its software dropped 35 percent as customers postponed purchases. AMD slashed its revenue estimates BMC slashed its profit estimates RBAK slashed its profit estimates LOGI slashed its profit estimates. BSX lowered its profits estimates SGP slashed its profit estimates CRUS low end of guidance DPH lowered its revenue estimates BGEN lowered its revenue & profits estimates VRTY lowered its revenue & profits estimates SLR lowered its revenue & profits estimates ADBE lowered its profit estimates ADPT lowered its revenue estimates SGP slashed its profit estimates VITR economic conditions remain challenging PMTR lowered its revenue & profits estimates ISCA slashed its revenue & profits estimates EXFO lowered its revenue & profits estimates ONNN slashed its revenue estimates NLS slashed its profit estimates NLS guides below consensus CSTR guides below consensus GLYN guides below consensus INSU guides below consensus USF slashed its profit estimates GW slashed its profit estimates LSS slashed its profit estimates HUMC slashed its revenue & profits estimates NLS slashed its revenue & profits estimates CSCO Yesterday, Chambers said companies would start spending on information technology two to four months after their business turns up. "There is nothing new in what John has been saying the last several quarters." BWTHDIK