Modest Drop Pretty Decent, Considering....
The news was not particularly good today, and so a modest drop was certainly a decent performance. Consider:
1) Semis weak on AMD's poor guidance.
2) Materials mixed on Alcoa below estimates.
4) White House opposes Senate housing bill(builders drop).
5) Washington Mutual raises $7 b in capital, but at the cost of 100 percent dilution (bad).
Still, we do not want to get into a pattern of drifting lower here. The big earnings report is our parent GE on Friday.
Tomorrow we get Circuit City --don't expect too much. Electronic sales have been weak across the board for most electronics companies, from camcorders to DVDs to satellite radio and home audio--all down. Computer sales seem to be OK.
What about flat panel TVs? The big growth period appear to be over. Everyone has bought a high tech TV, and because it is essentially a commodity, we are seeing margin compression--their margins are close to 20 percent for flat panel TVs, but it's in the single digits for discounters like Wal-Mart or Costco . That means pressure.
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