To: space cadet who wrote (18713 ) 7/25/1998 10:01:00 AM From: Zeev Hed Read Replies (5) | Respond to
Space cadet, I have stated on this and many other threads that I see a major correction from a "marginal new high" in the Dow (anywhere between 9350 to 9450) this autumn (September October), but I do not see, yet a bear market extending into next year. Within the semi-equip segment, I think that next year, the market will price the fast growers (like CYMI and VECO), those that grab market share at cyclical bottoms (like AMAT) and those with innovative new technologies (like NVLS) at multiples of 25 to 35 of what the market think the following year (2000) will be. This will be supported by excess liquidity in our markets. The excess liquidity, IMHO, comes from two major sources, the budget surplus (which should continue at a rate of between $20 to maybe $50 Billions annually) and a slow leak into international markets (including ours) of more than $200 billions. These two elements together with the disinflationary pressures from Asia will keep interest rates going down (whatever AG is mumbling), because there will be too much money in a situation were our government is issuing less and less paper. If my turnips are right and by the end of this year our long term treasuries are fetching something around 5.25% (or anything under 5.5%) and the Sep/Oct decline brought us back to about 8250/8350, you will have the right mixture for a very strong year end rally. Add to this that we are already at a BTB below .8 in the semi-equip segment, time wise, it could not go very much lower and historically bottoms in this segments were established when the BTB was just under .8 (now it is already in the .7 range).
