GNP, M&A, EBITDA, P/E, NASDAQ, Econo-thread Part 10

[MattHiggs]

initiate part 11

[Roland]

"Bulls seem to be running wild this week."

They always remind me of that austrian rock band: "The Hallucination Company"

Sept 11th helped them to get their "bottom"-rally early. Well, the real problem is the post-bubble world, and that reality will hit.

S&P now 36 times trailing earnings
19 times forward funny earnings

My market recommendation still the same:

FASTEN SEATBELTS!!!

[Ted Striker]

I agree, it's been going up and down for the past few weeks. My money is still with bonds and money market.

So you are saying the bottom has been found Herr Anwalt?

However, an Intel rep had an interesting view on things. She said that Intel was making plans for the UPSIDE of the economy, she said they were trying to be ready for it first so as to capatilize on the situation.

I think the worst of the labor cuts are over, however we will still see a steady stream of them on a much smaller scale, for a couple of more months.

[Roland]

"So you are saying the bottom has been found Herr Anwalt?"

I'm not an Anwalt, you bitch!

There is a kind of bottom forming wrt earnings; any further fall won't be that steep. Stock prices are another matter. They often discount a return to the merry bubble times which isn't going to happen.

"She said that Intel was making plans for the UPSIDE of the economy"

Avoid the stock like the plague, then. Seems to confirm what I assumed in the AMD thread.

"I think the worst of the labor cuts are over"

The US economy will either fall further into recession or stay sluggish for longer. Alan's rampjob and the fiscal package can only ignite strawfires. Many companies like INTC haven't seriously cut back on useless capacity yet. I'd also say that many of the announced cuts haven't been implemented yet. So the worst for jobs is yet to come.

[Sten Sture]

"...the worst for jobs is yet to come." - Rolandmittler

I concur. 70,000 or so cuts today alone. Could be very wrong if holiday retail sales are strong, but I am doubtful. The attitudes of our clients are decidedly negative wrt their personal and corporate spending. (I have been doing Q3 client meetings for the past couple weeks)

V-shaped recovery talk has been all the rage of late. I am looking at more of a funnel shaped recovery. We will get some refinance related boost and the Keynesian spend-a-thon will help - but if we don't shutter capacity and deleverage it won't last long.


Derek - GNP - LoL! I did that again yesterday. Must be all of this Nationalism going around. Domestic doesn't sound patriotic.


I do appreciate rt coddling my fragile thread ego. I might have flipped my lid and joined a Berkeley commune or gone to law school.

[DanS]

Speaking of global crossing, you would expect that these bandwidth companies should be worth slightly more than worthless. Maybe this is a "last man standing" type of business...

LVLT is trading at .36 x book. GX at .14.

[el freako]

Well just to muddy the waters even furthur...

Here are my lates 5 year forecasts for the G3:


Growth for the USA, EU and Japan:

2001: 1.00% 1.75% -.75%
2002: 0.00% 1.25% -.75%
2003: 2.00% 2.00% 1.50%
2004: 3.50% 2.50% 2.50%
2005: 3.50% 2.50% 2.50%

averages for the 5 years to:

2000: 4.00% 2.50% 1.25%
2005: 2.00% 2.00% 1.00%


Unemployment rates for the USA, EU and Japan

2001: 4.75% 7.75% 5.00%
2002: 6.00% 8.50% 5.25%
2003: 6.75% 9.25% 5.25%
2004: 6.50% 9.50% 5.25%
2005: 6.25% 9.25% 5.00%

averages for the 5 years to:

2000: 4.50% 9.75% 4.00%
2005: 6.00% 8.75% 5.25%


all figures rounded to the nearest 0.25%

[Sten Sture]

Is that Nominal or Real?

el - that sounds about right to me. Though Japan could still be zero, since they haven't figured out econ101 yet.


DanS - LVLT bonds are trading at 40% of face. Tells you what the bond guys think of the quality of their book value. Survivors are just going to buy these guys' capacity for a few pennies at their liquidation sale. More venture capital down the toilette. Makes me cry.

Sprint shut down their ION program today - yahoo: less money pissed away in the near future. Looks like there will be six tele survivors. T, VZ, WCOM, BLS, FON, & SBC... about who were in place five years ago.

[Colonâ„¢]

EF, how did you reach those forecasts?

[Saras]

Level 3 Comm Inc Estimates Raised at Goldman Sachs
By Lindsey Mackay

Princeton, New Jersey, Oct. 15 (Bloomberg Data) -- Level 3 Communications Inc. (LVLT US) was maintained ``market perform'' by analyst Frank J. Governali at Goldman, Sachs & Co.

How come Frank's not behind bars yet?

[Saras]

Colon, Colon...

You'll never be chairman of AIMR unless you pass Goat Intestineology 101.

[Roland]

Sten:

"Rolandmittler"

Is that swedish ?

"V-shaped recovery talk has been all the rage of late. I am looking at more of a funnel shaped recovery."

Or a W.

"We will get some refinance related boost and the Keynesian spend-a-thon will help - but if we don't shutter capacity and deleverage it won't last long."

Yeah... also the combo of opening the spending floodgate, tax cuts and a crappy economy will produce a nice deficit again. I'm still not sure the bond market has really discounted that yet, being busy trading on headlines. Qu'est-ce que vous pensez, Monsieur Sten ?

"Domestic doesn't sound patriotic."

Try "homeland". "GHP". Sounds good.

[Roland]

EF:

My estimate for US 2001-2005 is 1.25-2 %, so you're at the top end of my range there. But I think you're a bit too pessimistic on Europe. Btw, what kind of goat... I mean, what labour productivity growth estimate are you using for the US ?

Saras:

"How come Frank's not behind bars yet?"

Hmm... he said "market perform". This means that the market will...

Colon:

A rare appearance. What's going on ? One could think you're busy...

[Roland]

Hey where's randomturn ?

His SAP just crashed 15 % on a warning.

And what will GP tell us about perfect markets ?

[Saras]

And what will GP tell us about perfect markets ?

Markets are perfect... in the long term. In the long term we are also dead.