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

To: Sam who wrote (48767)	8/1/2010 1:35:30 AM
From: Donald Wennerstrom	2 Recommendations Respond to of 95427

The semi sector(SOX, etc) has been moving upward since Nov 08 in terms of earnings and outlook. The SOX topped out at 400 about 3 months ago, and for the present has been in a downtrend even though actual earnings and estimated earnings have been moving upward. People have had high hopes for the past year or so that a recovery was at hand and they wanted to believe. The semi sector had been "starved" since the downtrend started in mid 2007 that bottomed in Nov 08. This allowed a very nice uptrend to develop and continue as far as the SOX index is concerned until about 3 months ago. Now we(the market) has a dilemma, can the semi sector hold up and continue a rise in the face of a possible recession coming soon. As you say, <<All we need right now, IMHO, is some good macro-economic numbers, especially some good or even decent employment numbers.>> IMO, the market is very afraid that a further recession may be at hand. No matter how good the semi sector, and other sector earnings appear right now, a lot of indicators do not support much, if any, better economic conditions going forward. The following is the front page article on the IBD in this coming Monday's issue. <<GDP Growth Slowed To 2.4% In 2nd Qtr; Shoppers Cautious By SCOTT STODDARD, INVESTOR'S BUSINESS DAILY Posted 07/30/2010 07:27 PM ET Economic growth cooled in the spring as consumers lagged, the Commerce Department said Friday, reinforcing views that unem ployment could stay high for years. GDP rose at an annualized 2.4% in Q2, just under views. Q1's gain was revised up to 3.7%. The recession was even worse than previ ously estimated, revisions showed. "This was the inevitable slowdown that we were poised to see in the economy," said Brian Levitt, an economist at OppenheimerFunds. Also, July data on factories and consumer sentiment beat views. Stocks, down early on the GDP figures, reversed to close mixed. The Nasdaq rose 0.1%, while the Dow and S&P 500 were essentially flat. Consumer spending — 70% of economic activity — grew at a 1.6% rate in Q2, down from Q1's sharply downward-revised 1.8% pace, Commerce said. It contributed 1.15 percentage points to GDP. But the trade deficit cut 2.78 percentage points from GDP as im ports soared despite solid exports. With consumers likely to stay on the sidelines due to high debt loads and job worries, analysts see continued subpar economic growth. "We would just love to see GDP growth on the order of 5% to 6% at this point for several quarters" to absorb the 8 million people who lost jobs during the downturn, said Scott Brown, chief economist at Raymond James. But, he added, "that doesn't seem likely." Business spending was an even bigger growth engine in Q2, ex panding at a 17% pace on strong demand for equipment and software. (Some of the import surge may be tied to the investment boom.) "Profit growth has been very good, and that is supportive" of corporate outlays, Brown said. Strong capex should be a good sign for future growth and jobs. But firms have been reluctant to hire amid fears about the economy and sweeping regulatory changes. Friday's employment data are expected to show that July payrolls fell by 87,000 as temp census job layoffs offset modest private hiring. The GDP report showed that inventories expanded by an annualized $75.7 billion in Q2, the second straight gain after two years of declines. Restocking added 1.1 points to growth, but analysts say the adjustment is mostly finished. Government spending also gave a boost to Q2, but that too should end on fading federal stimulus and state and local cuts. Residential fixed investment shot up 27.9%, adding 2.1 points to GDP growth, as the homebuyer tax credit boosted sales. That won't last, though. Demand and construction have slowed sharply since the credit expired April 30. "It is doubtful that business and residential investment, state and local spending and inventory rebuilding will continue to be as robust," wrote Joel Naroff, president of Naroff Economic Advisers. On the plus side, the Institute for Supply Management-Chicago's manufacturing index rose 3.2 points in July to 62.3, defying views for a fall. Most regional factory reports have suggested some slowing. ISM's national index, due Monday, is expected to show a dip of 2.7 points in July to 53.5.>>