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Technology Stocks : Compaq -- Ignore unavailable to you. Want to Upgrade?

To: MarkM who wrote (32415)	9/6/1998 12:03:00 AM
From: CGarcia	Read Replies (1) \| Respond to of 97611

Mark, where do you see CPQ stock at by December of this year?

To: MarkM who wrote (32415)	9/6/1998 10:09:00 AM
From: tonyt	Respond to of 97611

>Feedback? >Seems to me we are in a bearish downtrend in the blue chips, something which has >been evident in the smaller cap stocks for a while now. Agreed. DOW now down 20% from recent high. However, it is still up significantly over the last 3 years. It can go much lower. However... 'this time is different' than other bear markets as interst rates are at historic lows and unemployment is also very low. True, we are in a global economy now, but still, economically, things are damn good in the US. >Rubin saying that the interest rate will be lowered is too little too late. Never too late to lower rates. > CPQ chart showed a dead-cat bounce and now begins that long, treacherous, >miserable, rotten slide into the blood, guts, and gore of oblivion. CPQ can go lower, but is will hold up better than the bank stocks. >Also witness that the banking sector is not presently leading us out of this >mess ...they are actually leading us into it!!! Oh course! Banks have huge exposure to global markets. Why would anyone expect the banking sector not to lead us into this mess? >I have gone 100% cash As I'm sure you are aware, this is a very bullish sign. Last week was a bad indicator with the upcomming holiday w/e (although vol friday was greater that I had expected). This comming week will be a better indication of where we're headed. Also, the o/s markets will have a head start on us since we're closed Monday. Next week should be very interesting.

To: MarkM who wrote (32415)	9/6/1998 10:47:00 AM
From: tonyt	Respond to of 97611

WSJ: "Greenspan Indicates Fed Dropped Bias Toward Tightening at August Meeting" Dow Jones Newswires WASHINGTON -- Federal Reserve Board Chairman Alan Greenspan all but confirmed that the central bank abandoned its bias toward tightening at its last policy-setting meeting and admonished fellow central bankers to weigh carefully the ramifications of recent financial market turmoil. In a speech Friday at the University of California at Berkeley, Mr. Greenspan suggested that the U.S. can't escape the turmoil and pressures of the international marketplace "It is just not credible that the United States can remain an oasis of prosperity unaffected by a world that is experiencing greatly increased stress," Mr. Greenspan said. "Developments overseas have contributed to holding down prices and aggregate demand in the United States in the face of strong domestic spending. As dislocations abroad mount, feeding back on our financial markets, restraint is likely to intensify," Mr. Greenspan said. In his most explicit reference to the Federal Open Market Committee's deliberations, Mr. Greenspan indicated that the FOMC abandoned its bias toward tightening at its most recent session. The minutes from that meeting have not yet been made available. "In the spring and early summer, the Federal Open Market Committee was concerned that a rise in inflation was the primary threat to the continued expansion of the economy," Mr. Greenspan said. "By the time of the Committee's August meeting, the risks had become balanced, and the Committee will need to consider carefully the potential ramifications of ongoing developments since that meeting." While indicating that pressures on the economy were "balanced," Mr. Greenspan restated the need for vigilance on inflation. "To be sure, labor markets are unusually tight, and we should remain concerned that pressures in these markets could spill over to costs and prices. But to date, they have not." Mr. Greenspan raised several questions about the rationality of assumptions of securities analysts, and thereby indirectly questioned the level of stock prices based on such assumptions. "Security analysts' recent projected per-share earnings growth of more than 13% over the next three to five years is unlikely to materialize," Mr. Greenspan said. "It would imply an ever increasing share of profit in the national income from a level that is already high by historic standards," Mr. Greenspan said. "Such conditions have led in the past to labor market pressures that thwarted further profit growth." Mr. Greenspan restated a quip in which he chided markets for looking for earnings too far into the future, even in an atmosphere of near price stability and reduced threat of inflation. "Current claims on a source of income available 20 or 30 years in the future still have current value. But should claims on the hereafter?" Mr. Greenspan asked. High equity market values relative to income and production also increase potential for economic swings and should give people reason for "caution," Mr. Greenspan said. "Since equity values are demonstrably more variable than incomes, when equity market values become large relative to incomes and GDP, their fluctuations can be expected to affect GDP more than when equity market values are low," Mr. Greenspan said. "Clearly, the history of large swings in investor confidence and equity premiums for rational and other reasons counsels caution in the current context," Mr. Greenspan said. "We have learned in recent weeks that just as a bull stock market feels unending and secure as an economy and stock market move forward, so it can feel when markets contract that recovery is inconceivable. Both, of course, are wrong," Mr. Greenspan said. "The immediate cause of the economic breakdown [in Asia] was an evident pulling back from future commitments" where the emergence of excess worldwide capacity in semiconductors may have been a triggering event, he said. "The process became self-feeding as disengagement from future commitments led to still greater disruption and uncertainty, rising risk premiums and discount factors, and a sharp fall in production," Mr. Greenspan said. In contrast, expectations played a generally more positive role in the U.S. where "the rise in stock prices also meant a fall in the equity cost of capital that doubtless raised the pace of new capital investment," Mr. Greenspan said. Higher stock prices also reduced the cost of capital. "Coupled with the quickened pace of productivity growth, wage and benefit moderation has kept growth in unit labor costs subdued in the current expansion. this has both damped inflation and allowed profit margins to reach high levels," Mr. Greenspan said. But even virtues can become a vice, he noted. Japan has had savings and investment rates far higher than those in the U.S., but its per capita growth potential now "appears to be falling relative to ours," he said. "This phenomenon of over investment is observable even among more sophisticated free market economies .... It is arguable that their hobbled financial system is, at least in part, a contributor to their economies' subnormal performance," he said.