12/16/99 - Abn Amro reiterates buy,
believe gross and operating margins will be essentially
flat next year.
1/20/00 - Boston Scientifc Cut
to 'Outperform' at ABN Amro.
What has changed
this past month to warrant the downgrade?
Cruzer, the oil price is more a function of
demand than supply. The recovering economies you point
out in Europe and Asia have been demanding more oil
and oil based products, plastics, etc. That has been
accelerating for more than a year, and I don't remember that
there has been any supply shrinkage to speak
As an oil investor, I know that it takes quite a bit
of time to get more production going. It will chase
the price though, and supply will surely bring the
price back to a more normal point. There is only one
other thing on earth more plentiful than oil; that is
I doubt that oil will do more than
slow down growth a bit, but that's an educated guess.
Healthier economies should drive demand for more exotic
medical and other products, IMHO.
Well, LU is either the waitress at the local
burger stand outside my double-wide, or Lucent
Technologies, the old Bell Labs. Look at their profile and
Debt is actually very attractive to start-up
companies. Money is fairly cheap today, even at 8%'ish
levels. The whole name of the game for start-ups is
equity and how to get money without giving up equity.
Debt is attractive for those reasons, plus in a
liquidation scenario, debt gets serviced before preferred
shares so if the company show signs of survival, debt is
relatively easy to get.
A lot of debt can sink a company. The amount of
debt in some of the startups is dismaying. Doesn't the
amount of debt that a company has figure into the
earnings of a company? And then into the PE ratio? And
pardon my ignorance; what is LU?
I guess it is
time for the PE discussion. Discussion of the P/E
makes BSC look good, it is cheap now. I am not sure all
of the questions have been answered but will have to
IMO OPEC is a good example of how market forces
discipline people who try to corner markets. You screw the
customer, he goes out of business and then there is no
market. Now the seller is screwed too. If prices are too
high sales fall. It is a 15 second course in
economics. These OPEC guys have tried this a lot of times in
the past and usually it doesn't work. They hold down
productiona and prices rise but someone in Opec cheats and
sells more that he is alloted and the prices fall. The
the OPEC members fall over themselves chopping prices
until the cycle is repeated. While I would not call
these guys friends they are too disorganized to be
The predicted increase is 25 points. I am
wondering if it will be more but since the oil increases I
doubt it. The oil increase may not slow things down
immediately but it will soon. Maybe Greenspan is thinking
this too. I am also wondering if Iraq is coming on
line soon. This may have been done to keep Iraq from
knocking the bottom out of the market. Iraq is pretty
desperate for income.
What does this have to do
with Med stocks and BSX? My opinion it will float all
of the medical boats.
Yikes - recession? The older I get the more I
think that recessions are a type of "group screw-it"
than anything else. Sure, rising prices could create
rising interest rates which causes a slow down in
spending. Unfortunately they seem to be orchestrated by the
FED as opposed to being natural. Look at '94, clearly
FED endowed. But that said, the best way to make
money is to go into a recession with money - you always
come out with more. I actually am more concerned about
the amazing amount of debt that some of these
companies are starting to amass. What happened to LU when
they missed. The analysts did the math, looked at all
that debt and rising rates and absolutely hammered
them. I think this is a new paradigm (we like that word
alot in the Valley) where there are going to be
surgical excisions of companies that underperform.
This country moves most goods with oil. I think
that we have our head in the sand if we do not pay
attention to trends in oil prices. OPEC seems to beholding
the line this time with production quotas. Asia's
recovery will only increase world demand and make it
possible for the "cheaters" to have less effect on overall
supply. I filled up this morning at 1.39 a gallon here in
Minnesota. That is the highest price at the pump in years.
I'm going to stick my neck out and predict a 50 basis
point rise in interest rates next week when Greenspan &
When opec has tried to jack up the price of oil
by cutting production usually it works for a while
until one of the oil producers gets a little greedy
then the cutback falls appart. This is an unfortunate
time for such an action. With the Asian economies
recovering and European ones starting to prosper along comes
high oil prices. Since oil affects just about every
part of the economy it will have a slowing effect on
every aspect of the economy. It is going to take a
little bit of time as the cheaper inventories draw down,
but this is the event that will pull the economy into
recession. I am going to stick my neck out on this one.