BULLISH Blood.['Expert' opinion from Charles Blood Brown Bros.Harriman}
Jorge:
Let me try if you don't mind. First of all about your question about possible Chinese devaluation and the implication for DELL.
Recently Mr.D was asked the same question by one of the interviewers on a popular business program on T.V,I don't recall which one but I did post the interview here earlier.Anyway Dell said that in case of a devaluation the price of Dell products would go a bit higher for the Chinese consumers while this would turn out to be beneficial to Dell as the company sources quite a significant percentage {more that what Dell sells to China} of the components from China for other world markets so the net effect could only be positive for DELL and that is good enough for me.
As for Venezuela I will let Mr.Blood speak on the subject as you very well should know that his level of knowledge of the subject, in all likelihood, is much higher than mine, so here it goes...<g>
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Source:NBR 8/21/98
<Strategist Charles Blood Still Bullish On The Markets
SUSIE GHARIB: Well, even though it was a scary day of trading, today, all around the world, our next guest is still optimistic about the outlook for U.S. stocks. Joining me now is Charles Blood. He is the chief financial market strategist at Brown Brothers Harriman. Nice to have you with us this evening.
CHARLES BLOOD, MARKET STRATEGIST, BROWN BROTHERS HARRIMAN: Hi, Susie.
GHARIB: In your report that you sent out to clients today, let me quote from it. You say, "the next significant move in the Standard & Poor's 500, and the Dow Jones Industrials will be a rally to new highs in the months ahead." Kind of hard to imagine that after what we saw going on in the Dow and the S&P, today. Why are you optimistic?
BLOOD: Well, certainly it is hard to imagine it. And I'll have to admit. In the middle of the day today, even though I was bullish, I was scared. So I said, wow, what must other people feel like. Basically I think the story is, it's an ongoing story, but part of it is that interest rates remain low. And actually, the 30-year bond went to a significant new low in yield today. So that really shows there's no financial pressure in the U.S. The economy's growing on the domestic side. Corporate profits, while not spectacular, are actually continuing to increase despite all the influence from Asia. So the background remains good. And on a shorter term basis, the market is very oversold, and you see a lot of the usual technical signs of a bottom in-place now.
GHARIB: But the way that you even describe how the U.S. economy is going. There's a different picture from other strategists who, that we have been speaking to, who are saying, you know, this global, the potential for this global recession will have a bad influence on earnings of American companies, in that their earnings growth is just slowing down. And that means large cap stocks will also go down. And as they go down, then the whole consumer confidence thing will be affected. I mean, what is your counter-argument to something like that?
BLOOD: Well, you know, part of the counter-argument is there's tremendous strength in the domestic economy. And even if that slows a little bit, that means there's lots of companies, including the big global companies, that are selling in the U.S., that are getting good profits here. So this Asia thing is not a uniformly negative hit to corporate earnings. It hits the companies that have, what, commodity companies like the oil companies. But the users of oil, either consumers or other companies, and the users of commodities, are actually benefiting. So you go through, company by company, and you don't find the uniform deterioration that would really be a problem.
GHARIB: Let me ask you this. If this weekend, Venezuela devalues its currency, will your position change at all? Will you be a little more worried?
BLOOD: Realistically? No. Again, I look for the linkage back from these economies to the United States, and they're all relatively small. The main linkage is through trade. It's not as if the equivalent thing was happening in Japan or Europe. In Japan and Europe, the situation is, in Europe, better, Japan, not so good, but not deteriorating the same as Venezuela.
GHARIB: We just have a few seconds, let me just ask. What would make you change your mind? What worries you?
BLOOD: Higher interest rates would worry me, would scare me a lot. But there's no sign of that happening anytime soon.
GHARIB: All right. We'll leave it there. Thank you very much for coming in and talking to us. We've been speaking with Charles Blood of Brown Brothers Harriman. |
