/ ==================== / wed.oct.20011010 / ==================== /
12/ Sherry Cooper BMO Nesbitt Burns Chief Economist & Strategist
Harris Nesbitt .
Book : Riding the Wave : Taking Control in a Turbulent Financial Age .
21 Club 21 W 52 .
Sherry Cooper : Excellent slides : soaked
with information . Check out the BMOnb website .
[ 20011017/ Online version w slides ]
GDP down then up next year strong rebound bottom 02q0 .
Already :
gold from 270 - 290 , oil up then down . Swiss franc up flat w euro , yen .
US still attracting WW cap at low interest rates .
Just_In_Time changes to " Just in Case " .
shipping delays , inventory shortages , slowing of global trade .
ala Smoot Hawley .
Confidence U of Mich 80 down from 112 Bo`00 . Recession levels 60 - 70 .
CNN effect : Retail Sales down as thru election uncertainty .
Media fixates on single subject . stuck in nasty hotel in suburban Chic .
Media Fearful . When something replaces WTC in news w b good for economy .
Terrorist timing after labor day .
already ~ 0 q%q GDP growth . hours%wk worked -.03 q%q ;
business led recession , capital cheap , overinvestment .
( Market_Value % Asset_Replacement_Cost )
reached 1.4 Begining of `00 ;
now back to `97 level ~ 1.1 .
CapEx % GDP peaked mid `00 over 15 up from < 13 B o `97 .
Equip & software investment hit.08 y%y . Capacity Utilisation NonTek stable .
Reduction in production & inventory about worked off . Overall inventories
quite low . Still inventory in telecom equip .
0911 : land lines jammed Highspeed at home .07 , Cd ,03 penetration .
Norway & Finland already have > .5 .
Record layoffs : > 240 in a month . House & vehicle sales continue .
Infusion of cap w/o precedent . refinancing up , Mortgage apps continuing down
net worth down from 6.25 to 5 times income - back towards pre `95 levels .
-.1 y%y chng greatest decline since WW2 . neg for 1st time in long time .
Global trade down even before attack . Never have markets been so synchronized
S&P500 v DAX . Motorola bad - so is Nokia . other sectors differ .
$ declines modestly . Every Central bank easing in unison .
Inflation worry nowhere . Canada tek meltdown worse than US ( Nortel JDS ) .
Non tek utilization still better than US . Layoffs happening .
housing not strong .
CPI plunges during recessions . price of tek products falling .
Commodity metals in free fall . Olu gas bak to near `99 .
Very confident rebound w/i 1 year . peace div over . Berlin wall >-< WTC .
%y data storage - reconstruction
.0272 - 2 yr treasury lowest since `58 , down from .06+ beginning of yr .
S%L borrows short lend long . Lot of cap on sidelines .
Where ? If you know , let me know
personal tax ratio way down .
nasd -.7 , S&P -.3 from peaks ; since 0911 losers more wide spread -
Fed valuation model .008 from .75 peak .
{ ( Treasury10yr.yield % SP500.Projected_Earnings_yield ) -1 }
Big US - Canada PE.trailing gap : ( `SP500 28 ; `TSE300 15 )
avg return since `70 ( `stock .121 . ; `bonds .094 ; `cash .067 ) .
Top .1 best days account for all gains on SP500 since `70 .
underlying fundamentals very strong .
Book : Riding the Wave - long cycle .
No other economy better : fastest growing , youngest , magnet for talent .
Q&A : trade def ?
def misrepresents because product created by multinationals outside are
not counted v foreign out
massive net foreign cap inflow .
Where else are you going to go - treasury bills . Productivity & RoR highest
in world .
Changes in your book ? more on anti-globalization : education is key -
quality universal ed . tensions created w Abraham .
SS demands in 10 yrs ? huge issue . bulk of boomers - born `65 .
but have less problem than Germany , Japan .
US is REAL rich . Bankruptcy brought down Russian bond mkt . Nothing
remotely reasonable would bankrupt US .
Fed money into reconstruction ?
Fiscal policy ? Fed long lags .
Risks ? terrorism .
Excess capacity like `29 ? Depression ? Fed lower money supply in `29 .
/1328/
I happened sit at the table where a lot of her
friends and Sherry sat . I mentioned my concern about government
exploding costs hiring the layed off portion of the population to
check the IDs of everybody else - gumming the arteries of commerce -
potentially enormous distibuted cost .
To paraphrase FDR , who I think should have said " We have nothing to
fear except Roosevelt himself " , we do now have most to fear from
the reaction to fear itself .
K.CoSy NoteComputing Environment
Rapid Econometric Modeling
