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

To: Jacob Snyder who wrote (20338)	6/14/1998 11:31:00 AM
From: MileHigh	Read Replies (2) \| Respond to of 70976

Jacob, I read your post and "tend" to disagree. Here's why, in summary fashion. 1. Interest rates are the lowest they have been in 30 yrs or so. 2. Baby Boomers and the so called "tweeners" are pouring money into equities through 401K deposits. I do not see this changing because these same people have been brainwashed into believing, in the long run, and rightly so, that equities outperform all other investment vehicles. The WSJ, CNBC, Forbes, Money, etc. repeat this mantra, over and over and over and over....So what do we do as a group, we wake up every morning, go to work, and on the 15th and 30th of the month we deposit somewhere between 6-15% of paycheck to the equity market. Yes, I know this is a basic point, but a point not to forget. This money must go into equities. Sure it might not go into Semi equips or semis, for example, but for this reason you see KO and GE continue to be bid up as a safe haven play!! Not rational, just reality. 3. When do you see people pulling money out of the market? Well, I see it happening when all the boomers and tweeners will NEED to start taking money out of the market as part of a pre-retirement diversification program. This will be many years form now. 4. So in essence, we agree that more money will flow into the market, but I do not see it ending soon. So I guess I am saying, "don't fight the tape", this market is liquidity driven and will continue to be so. Your arguement is lucid and rational, but read Got's link from Forbe's (Thomas Miller?) on "Check it Out"...The rational, well argued, and reasoned answer sounds better, but often times does not play out in reality to be right.... Sorry about the rambling, Teri has heard this before. In closing, we've got a serious divergence going here, interest rates going down and equities following. As soon as some of the Asian panic is over, I can just see it now, the CNBC group saying "the economic environment for equities has never looked better"...BOOM, Summer Rally!! Again not rational, more realistic! Regards from a humble lurker, MileHigh

To: Jacob Snyder who wrote (20338)	6/14/1998 12:44:00 PM
From: Ramsey Su	Respond to of 70976

Jacob, have to disagree on your theory pertaining to labor markets. Though unemployment is at an all time low, the trend may be reversing. First, with record number of M&As, the CPQ/DEC type staff reduction is in the pipeline. The banking industry should see massive layoffs when all the deals are completed. Second, corporate America is no longer gunshy in using layoffs as one of the first tools for cost cutting. MOT is dropping 10% of its work force, the semiconductors and Asia being the driving force for this move. AMAT and other semi eq companies have done same before and would likely be doing same in the immediate future. Third, despite the fact that unemployment is at record low, there appears to be no real wage pressure. By that I mean the big union strikes such as UPS, airlines, etc. Though often disguised under BS such as working condition, most strikes are $$$ motivated. UAW finally made their move against GM, at about the worst time possible. The Japanese car makers must be jumping for joy. Though in disagreement on the cause, I also draw the conclusion that a correction is inevitable. I have spent the better part of the weekend trying to read up on anything with the word "Japan" on it. To my dismay, I have not find anything remotely positive. We all know what the problem is but I have yet seen any viable solution. Pressure was on Japan to permanently lower income tax rates. This was just about the dumbest idea I ever heard for the current crisis. Does anyone really think that by paying less taxes, the Japanese people are going to launch spending sprees instead of stashing them in savings. In fact the money would most likely flow out of the country, compounding the problem. Now Rubin is urging Japan to solve the banking problem. Like how, Mr. Rubin? Give us some step by step suggestion please. So far, I opine that a RTC type rescue is not feasible. What will eventually solve their problem is something that the world would just have to wait and see. What has all this got to do with AMAT? I conclude AMAT is the best (probably with a conservative biase) semi-eq company to invest in, WHEN the sector turns. The question is when? With 50% of its revenue from Asia, my current guess is AMAT will go down some more. The major reason is Taiwan is about to catch the Asian flu big time. I don't know how many fabs in Taiwan have semi-eq on order from various vendors. I would be shocked if the next words we hear from Taiwan are not - "PUSH OUTS". With Korea already deep in recession, then Japan, Taiwan would just about be the final straw. AMAT mind as well withdraw all sales staff from Asia. How about the US and Europe? Could someone in the industry enlighten me on this question. Why would "healthy" US and European semi companies be investing in new fabs when they know their competitors are down in the dumps? Are there any compelling new technology that would motivate a CEO to raise their cap investment budget? Are there economic life limitations that new fabs need to be replace old fabs even if they are just for making the same products? Needless to say, I am trying to gauge the domestic and EU demand. The last time AMAT traded in the 30s range was about 13 months ago. The forward outlook was very positive at the time and no one has even heard of the Asian flu. It ran up to the 50s until INTC's announcement of a push out in Oct 97 finally triggered a reversal. The news this time around is worse than that of Oct 96. I really don't see why we will not retest the low teens of the summer of 96. Finally, one big question. Can someone rule out an earnings warning from AMAT this qtr of significant magnitude? sorry for long rambling post. Ramsey by the way, Jacob, how does a fellow UCSD alum ended up in Alaska?