I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

[billstew]

I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

I believe other people have done analysis to prove the 1400 level is the correct new finsec crisis level -- but I have not been able to find this research. I would love to post the research, but I do not know where it is.

And I am not being excessively pessimistic with my numbers either.

A lot of DOW companies are cesspits of corruption with governmental approval by nepotism and favoritism. To view them as productive entities is an accounting illusion.

Randomly take for example Google's 300 USD share price [that is obviously only fit to be 35 USD, its bloated price being a meaningless construct]. Microsoft's share price has barely budged away from Intel's -- and both are cesspits of artificial productivity.

To expect 80% bankruptcy of the Fortune 2000 in this finsec crisis is reasonable.

Any economic system [and corporations, like governments are economic systems] fueled by artificial productivity will not last -- only real and meaningful productivity has the ability to keep a corporation alive.

The news is that all US sharmarket indexes will eventually deflate to their real world values.

[blazespinnaker]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Anyone who doesn't think the planet is doomed to total destruction by the end of the next month is totally naive, if you ask me.

[kartius919]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Sounds like a hyperinflation scenario to me. Precipitous decline in GDP and tax receipts, spike in unemployment, record budget deficits, two ever ongoing wars, two future wars in Pakistan and Iran, and baby boomer medicare costs. So will the DOW drop all the dead weight and become the DOW jones industrial index of commodity related stocks?

[*T*]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

To expect 80% bankruptcy of the Fortune 2000 in this finsec crisis is reasonable.

Wow. Someone more bearish than me.

Lukester -- where are you?

[globaleconomicollaps]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

I think Intel has been the motor force for our economy in a way that in a former age US steel was the motor force for the economy. That is changing fast:

http://arstechnica.com/hardware/news...ps-to-tsmc.ars

Atom can't feed fab monster; Intel outsources chips to TSMC

Monday morning's announcement that Intel will outsource the production of some of its Atom processors to TSMC is roughly the semiconductor equivalent of the recent cancellation of the newspaper editors' national convention, or of the closing of major dailies like the Rocky Mountain News.



The late winter storm now pounding the northeast US isn't the only freak weather event currently in progress. Hell itself has frozen over, and the proof is that, for the first time in history, Intel is partially outsourcing the fabrication of one of its CPUs to a foundry.

Intel and TSMC have jointly announced the start of a long-term, "strategic" collaboration in which Atom IP will be ported to TSMC's manufacturing process, with the Taiwanese foundry fabricating Atoms for some customers.

"It is a long-term collaboration. It is not about capacity. It's a strategic relationship that allows us to expand the growth opportunities for both companies," said an Intel spokesperson on a call announcing the venture. "This relationship between us and TSMC is strategic in nature; it's the first time we've ported a processor externally outside of an Intel process."

Both parties are being deliberately vague on the timing and the process node at which this will start, stressing that the current announcement is just about the "memorandum of understanding" (MOU) that they've signed. (The press release is similarly vague.) News of specific plans and products will follow much later, once the details have been worked out.

Intel's Sean Maloney set out to give the company's official explanation for the move by touting Intel's recent announcements of investments in 32nm and stressing that Intel still sees itself as a manufacturing company. He then jumped to the non-sequitur that the TSMC agreement will allow Intel to "attack new markets" and offer "post-recession products."

In response to questions, Maloney stressed that the existing Atom roadmap is unchanged, and that the TSMC relationship was not about replacing Intel's existing fab capacity, but about new markets. "We're doing it because it enables us to get access to a market that we can't do alone," Maloney said. "This doesn't replace what we're doing already, or what they're doing already. It's additive to what we're currently doing."

Intel totally failed to explain why its massive new investments in 32nm, not to mention its current 45nm plants and substantial legacy fab capacity, aren't just as amenable to "attacking new markets" as outsourced fab capacity. But while Intel can't possibly admit this, the reason is as clear as day: Atom is just too cheap to support Intel's legacy business model, which is about funding expensive new fabs on the backs of high-margin sales of existing, high-performance processors.
Betting the farm

Intel's margins on Atom are much thinner than those on regular desktop and server CPUs, and with each process shrink, Atom's cost (and price) will go down. But fabs get more expensive with each shrink, so the result is that Intel has to sell many more Atoms at 32nm than it does at 45nm to make money. The demand for all of those Atoms may or may not materialize, which is why Intel will pay TSMC to fab them and share the risk that the demand may not be there. Meanwhile, Intel wants to save its (very costly) in-house fab capacity for high-margin products, like its CPUs.

There's one big question about the new arrangement: could Intel actually stay in business by producing mainly Atom-class products on its 32nm and smaller lines, if the demand for performance increases fails to recover?

The main problem facing Intel is that, right now, nobody wants high-margin, high-performance CPUs. The demand is there for the cheap stuff, but Intel would rather not take the risk that this appetite for cheap will continue to balloon by turning even more of its premium in-house fab capacity to the task of cranking out Atoms. Better to dedicate the costly new 32nm fabs to producing high-margin CPUs on the hopes that demand for performance will eventually recover, while letting TSMC's fabs support any further growth in the Atom market.

There's one big question about the new arrangement: could Intel actually stay in business by producing mainly Atom-class products on its 32nm and smaller lines, if the demand for performance increases fails to recover? In other words, it could be that Intel has no choice but to bet everything on the possibility that a global appetite for 32nm, high-performance, high-margin CPUs will actually rematerialize, because the company couldn't keep going if it had to use its new fabs to support a rising demand for Atoms in-house.

I think the answer to the above question is "no, Intel couldn't survive in a world where the vast majority of customers just want ever cheaper Atoms, and relatively few are willing to pay premiums for continued performance scaling." I don't have the numbers to back this up, though.

On a final note, props to Dave Manners, who saw this coming when Craig Barrett simply resigned as Intel's Chairman without triggering the normal chain of succession at the company:

It looks as if, instead of waiting for the normal orderly succession, Barrett has decided that it's time to go. Now why should he want to go? Having survived 35 years in the fearsomely confrontational Intel culture, he would not leave over a small thing.

But there's one issue he might leave over: Intel's strategy as a manufacturer. Intel has always been a leader in process engineering. Barrett came from the manufacturing side of Intel, and re-vitalised the companies' fabs during his time as CEO with his 'copy exactly' strategy. If there was to be any change proposed in Intel's manufacturing strategy, Barrett might decide he doesn't want to stay around to preside over it.

Today's announcement of a major shift in Intel's manufacturing strategy suggests that this is exactly what happened. Barrett apparently didn't want to stick around at an Intel that outsources parts of its core CPU business.

[petertribo]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

A lot of DOW companies are cesspits of corruption with governmental approval by nepotism and favoritism. To view them as productive entities is an accounting illusion.

There is certainly a lot of Evidence to support the above statement which I will not list here. The FED and Government continue to talk about Transparency, Openness, Accountability and Reform. Well, they do the exact opposite particularly in the Accounting Department which, as far as I know, the only way to keep Score. The only official suggestions I have read is for looser not tighter accounting.

So, onward downward until we get some real and truthful Accounting in place. The Bailouts are all about avoiding the awful Truth.

One of the other factors is that the War Racket (the traditional and envied economic model for tapping into the US Treasury) has now been mimicked by the Financial, Healthcare, Prison, Insurance, Auto and other Rackets which to one degree or another receive large amounts of direct US Treasury $$$ in order to sustain their "business models".

[Rajiv]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

One of the other factors is that the War Racket (the traditional and envied economic model for tapping into the US Treasury) has now been mimicked by the Financial, Healthcare, Prison, Insurance, Auto and other Rackets which to one degree or another receive large amounts of direct US Treasury $$$ in order to sustain their "business models".

The reason that these rackets continually try to expand is "the necessity for growth" caused by the need to pay compound interest on "money" created out of thin air by the bankers --

[GRG55]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Anyone who doesn't think the planet is doomed to total destruction by the end of the next month is totally naive, if you ask me.

We have that long?

That's the problem with this site...too many optimists...:rolleyes:

[GRG55]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Would you care to divulge whether that's a nominal or real target? The comparative value and confidence in the currency unit in which the DJIA is measured would seem to be a very big part of any prediction of its future level [Zimbabwe being the most recent prominent example].

[Uno]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Can't we just blame the rise of US MBA schools on this mess?

At DOW companies, it seems like even executive assistants now require an MBA. Group think? LOL.

It used to be that you learned business through experience, not books.

Rather then spending 100K on an MBA, we should encourage peole to spend 100K and start a business.

Turn MBA programs back into old fashioned accounting finance degrees.

Put "economics" back under the social science department where it belongs.

[flintlock]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Can't we just blame the rise of US MBA schools on this mess?

At DOW companies, it seems like even executive assistants now require an MBA. Group think? LOL.

It used to be that you learned business through experience, not books.

Rather then spending 100K on an MBA, we should encourage peole to spend 100K and start a business.

Turn MBA programs back into old fashioned accounting finance degrees.

Put "economics" back under the social science department where it belongs.

Agree 100% on the "group think" mentality and its flaws. The garbage I was learning in business school back in the 80s struck me as pure bs. I decided to skip the corporate world and just start my own business. I preferred long hours and low pay to playing that game. I shudder to think what they are teaching MBA's now.

[cjppjc]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Agree 100% on the "group think" mentality and its flaws. The garbage I was learning in business school back in the 80s struck me as pure bs. I decided to skip the corporate world and just start my own business. I preferred long hours and low pay to playing that game. I shudder to think what they are teaching MBA's now.

I also agree. I cracks me up every time I see people on TV say "What does the Govt. know about running a business." Now I'm no fan of Govt. But you have to except the fact that they couldn't have run these companies any worse.

[tsetsefly]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

Can't we just blame the rise of US MBA schools on this mess?

At DOW companies, it seems like even executive assistants now require an MBA. Group think? LOL.

It used to be that you learned business through experience, not books.

Rather then spending 100K on an MBA, we should encourage peole to spend 100K and start a business.

Turn MBA programs back into old fashioned accounting finance degrees.

Put "economics" back under the social science department where it belongs.

youre right but you got it the wrong way. You now need an MBA to get into these companies, the companies require brainwashed employees so they give tons of money to university to continue the brainwashing.
Group think at its finest, sponsored by FIRE. Why do you think now one saw this coming and anyone who did was labeled, "crazy", "doomer" etc.
Looked at how Schiff was laughed at when he was with the "financial advisers".

It's a circle...

[don]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

One of the other factors is that the War Racket (the traditional and envied economic model for tapping into the US Treasury) has now been mimicked by the Financial, Healthcare, Prison, Insurance, Auto and other Rackets which to one degree or another receive large amounts of direct US Treasury $$$ in order to sustain their "business models".

Ike wouldn't have a hair left on his head.

[ASH]

Re: I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

I expect a 1400 DOW, the 14000 peak was a pre-bubble fluke...

So, I take it you are buying puts very cheaply for the lowest strike price you can find?