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Technology Stocks : Intel Corporation (INTC) -- Ignore unavailable to you. Want to Upgrade?

To: Ibexx who wrote (75309)	3/4/1999 1:15:00 AM
From: Ibexx	Read Replies (1) \| Respond to of 186894

Market and Economic Outlook--by noted economist Greg Smith: (in condensed form because of length of article) How can Atlas Shrug? The Fed has the weight of ailing world economics on its shoulders--its only logical step, in my opinion, is to keep US interest rates steady this year. In this price-powerless global business environment, only the world's most efficient and capable companies will survive, in my opinion, shrinking industries to a handful of dominant players. * Japan recovers soon? Yeah, right.... * The rest of Asia? Dare we hope? * South America? Its economy looks headed deeper South. * Europe has weakness of its own. * In a global environment like this, the Fed must watch its step carefully. * The Fed's only logical step is to keep US rates steady... * ...as to do otherwise could prevent the world economy from recovery. * So I expect the Fed will maintain interest rates this year. * The global business environment still has no pricing power... * ..and won't be getting any soon. * No pricing power equals no inflation... * ...equals double-digit profit growth for only a minority. * The global business environment has a need for lower prices... * ...that puts bottom lines on the line. HOW TO PLAY THIS MARKET: * ...This year I would say let the broadening market be your guide- not thousands of companies, but hundreds. * But despite A (hopefully) improving world economy, pricing power will still be non-existent... * ...pruning each industry to a handful of dominant players. * Thus, the stock market's leadership will not be very broad... * but there will be real winners. I continue to think two sectors of the US stock market that we will count among the winners are technology and communications. * The technology industry is expert at living with a pricing albatross-- thus best suited for the current economic climate. Other industries have to adapt. * Global consumer product companies have become consumer cyclicals--they could benefit from a recovery of demand over the next 18 months among non-US populations. ...and energy stocks should also benefit from the world economy's cyclical recovery. Beware the tests of March--preannouncement could be offset by strong inflows of March and early April based upon traditional pattern. * Q1 earning disappointments are distinct possibilities...all in all, I believe March will bring caveat, then April could represent another important uplift in the stock market. * ....and the earnings impacts of Y2K won't be lost on the market this year. It is estimated that 172 of the top 200 S&P companies will spend $23 billion to fix Y2K computer problems. About 45% of this has been spent as of the fourth quarter of last year--that and the first half of this year are the peak quarters for Y2K spending, at about $3-5 billion per quarter. Second-half earnings may be helped as spending ramps down sharply. However, the intensity of competition probably demands that spending on technology remains high, with spending shifted toward more beneficial technology such as system integration. It is possible that earnings may be helped significantly next year by the improved productivity "this" spending implies. _____ Ibexx