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Technology Stocks : Semi Equipment Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Donald Wennerstrom who wrote (12410)	11/6/2003 5:40:07 PM
From: Return to Sender	Read Replies (2) \| Respond to of 95420

Don, I found these notes interesting from RobBlack.com. First on the low VIX. Something that Gottfried has been correctly and patiently been trying to point out to me with his charts: The impact of interest rates on equities has not been lost this year. Indeed, the bulk of the year-to-date returns in the S&P 500 occurred while long-term rates were declining during April through the first half of June. That said, there have been a few cases where the S&P 500 has advanced in the face of rising interest rates. Outside the bubble year of 1999, however, we cannot think of an episode in recent years where equities rose significantly at a time when interest rates were rising. Bottom line: rising rates limit the market’s potential. One interesting development during the past week was the seven-year low in the VIX index. Is this meaningful? Well, yes and no! It does warn that there is a great deal of complacency on the part of market participants at this time. However, the VIX has declined without consequence in the second and third years of a recovery before. In other words, it loses a little of its usefulness at this stage of the economic cycle. That is not to say that we do not heed the contrarian call coming from the VIX; rather, admit that its timing ability is somewhat diminished at this time. Look for a confirmation from the put-to-call ratio.Until then, be bullish, but less enthusiastic. And of course some notes on the semiconductor stocks: Semiconductors . . . Semiconductors sales are expected to increase 15.8 percent to $163 billion in 2003 and rise 19.4 percent in 2004 to $194.6 billion, trade group Semiconductor Industry Association (SIA) said. Beyond 2004, global chip sales are forecasted to rise 5.8 percent to $206.0 billion in 2005, and 6.6 percent to $219.6 billion in 2006. In the volatile memory chip DRAM market, the SIA is forecasting market growth of 7.9 percent to $16.5 billion in 2003 and 35.0 percent to $22.2 billion in 2004. In 2005, DRAMs are expected to decrease 20.0 percent to $17.8 billion. In 2006, this market will rebound 30.0 percent to $23.1 billion in sales. ATI Tech and Samsung collaborate on next-gen digital TV products. This new generation of Samsung digital TV's are to be powered by ATI's XILLEON and NXTWAVE chips. Expect Analog Devices to report solid results for its October-ending 4th quarter for 2003 with revenues at the high end of the guidance range of 3-5% sequential growth. Analysts are now expecting $547 million in revenues and EPS of $0.24 for the October Quarter. Bookings for Analog Devices were strong during the quarter driven by broad-based demand from nearly all vertical markets for both its DSP and analog products. estimate that the company’s book-to-bill ratio is likely to be above parity and guidance likely to call for revenues to grow another 5% sequentially in the January Quarter, which is stronger than consensus as well as the typical January Quarter for the company. Analysts are raising estimates. 2004 estimate is now $1.23 up from $1.08, and introducing 2005 of $1.50. The stock is likely to act well near term due to strong bookings momentum. However, the stock is already trading at 31x 2005 EPS estimate, which could limit upside longer term. Analysts are bullish on prospects for a cyclical expansion in the semiconductor industry. However, stocks of companies with more commodity exposure—which could see price firming in addition to margin expansion from increased manufacturing volumes—are likely to outperform the proprietary analog stocks. robblack.com

To: Donald Wennerstrom who wrote (12410)	11/6/2003 5:48:55 PM
From: Donald Wennerstrom	Read Replies (1) \| Respond to of 95420

Alan Greenspan is "astonished"! <<Productivity jumps 8.1% in Q3 Unit labor costs fall 4.6%, real compensation up 0.8% By Rex Nutting, CBS.MarketWatch.com Last Update: 5:16 PM ET Nov. 6, 2003 WASHINGTON (CBS.MW) -- Productivity of the U.S. nonfarm business sector surged at an 8.1 percent annual rate in the third quarter, the Labor Department estimated Thursday. It was the biggest increase in six quarters, but it failed to match expectations of Wall Street economists, who were forecasting, on average, a gain of 8.7 percent. See Economic Calendar. Productivity rose a revised 7 percent in the second quarter, up from the 6.8 percent estimated two months ago. Read the full release. Productivity -- defined as output per hour worked -- increased 4.7 percent in the past year, more than double the long-term average. It took just 95.3 workers to do the amount of work that 100 workers did a year ago. The surge in productivity has been driven by the necessity to cut costs while maintaining market share. With productivity rising so fast, in the short run there is no need to hire workers. Federal Reserve Chairman Alan Greenspan called the productivity gains "astonishing." In a speech to the Securities Industry Association, Greenspan said several factors, both cyclical and structural, have boosted productivity in recent years. See full story. His colleague, Gov. Ben Bernanke, said in a speech in Pittsburgh that the recent productivity gains were the major factor behind the jobless recovery. He expressed optimism that job growth would pick up soon, in part because companies have nearly exhausted their opportunities " to squeeze out still further gains in productivity." See full story. Unit labor costs fell 4.6 percent. Output in the nonfarm business sector rose 8.8 percent, the most since 1992. Hours worked rose 0.7 percent. Unit nonlabor costs, including profits, rose 11.6 percent. Real hourly compensation rose 0.8 percent. Manufacturing bests averages In the manufacturing sector, productivity increased at an 8.6 percent annual rate. Manufacturing unit labor costs fell 4 percent, with output up 2.9 percent and hours worked down 5.2 percent. Real hourly compensation rose at a 1.9 percent annual rate. Productivity increased 3.8 percent in the past year in the manufacturing sector. Based on the hours-worked data from the monthly business establishment surveys, economists expected total hours worked to decline in the quarter. However, the productivity measure also covers self-employed workers not covered in the establishment survey. In a separate report, the Labor Department said the number of new claims for state unemployment benefits fell to the lowest level since the recession began more than two and a half years ago. The average weekly number of seasonally adjusted new claims over the past four weeks fell by 10,000 to 380,000. See full story. cbs.marketwatch.com

To: Donald Wennerstrom who wrote (12410)	11/6/2003 6:38:03 PM
From: Sarmad Y. Hermiz	Read Replies (1) \| Respond to of 95420

>> We have a situation where any "good news" brings out fear that the Fed will hike interest rates sooner than later. Don, that's exactly right. Which makes the current situation so much fun to play. Though with substantial savings at risk, the fun is less and the stress is more. As you know my view is that current stock prices are disconnected from economic value. Propped up only by sentiment and "greater fool" pyramid scheme. However, all is not lost. The small investor has a special friend who does the heavy lifting for us. That friend is the mutual fund / brokerage industry whose job is to corral sheep into the shearing stalls. But for the effort to be worthwhile for them, there has to a good growth of wool on the sheep. That comes from earned income savings. So now we have ideal conditions for wool growth. Employment is increasing. Which generates savings. Which flow into mutual funds, who then buy stocks. People have a couple years worth of savings, which are now available to buy stocks. The Fed's job is to insure that savers do not have an alternative to stocks. But the twin deficits are eroding its ability to fulfill its mission. It's a transparent structure. I think it can be navigated by the little guy with a proper model of its workings. The basic calibration parameter at this time is how to gauge the effect of interest rates. I have no good way to do that. So as soon as they start to rise, I'm out. But tomorrow, us longs will enjoy the day. I think nasdaq will open above 2000. Sarmad