The canary in the coal mine for the economy is business capital spending.
IT spending? What IT spending?
According to ChangeWave Research surveys, spending is flat or falling.
There are no gee-whiz products to buy and install, the number of employees is shrinking, meaning there are lots of extra computers and spare server capacity lying about. The number of licensees for a software license is shrinking and so on.
What's worse, IT spending is contracting even faster overseas, and these markets account for more than 50% of the revenue for most big U.S. tech outfits.
Be sure to read all 7 reasons the stock market isn't going up any time soon.
Michael Shulman is a contributor to OptionsZone.com.
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Reader Comments (Page 1 of 1)
1-25-2009 @ 10:54PM
likins01 said...
There are two sides of every issue. You say the next tsunami is the option arm mortgages. Fortunately, treasury rates have declined dramatically and are used as the index to calculate the underlying note interest rate. This index rate will keep these mortgages at a very affordable payment cost thus reducing defaults. The erosion of credit underwriting coupled with mortgage instruments that were detrimental to the homebuyer is why we are in this economic crisis. However, with home prices falling 20-30 percent and estimates of an additional 10 percent in the offing, housing demand will return. With current low interest rates the affordability index will be at an all time high. Housing took us down and will lead us out of this recession.
The banks can be fixed in one swift move without the government having to provide additional cash infusion. Eliminate the mark to market right downs banks are currently required to make and capital will come streaming back to the credit markets. Low housing cost, low interest rates, available supply of credit all mixed together is the potion that will get us out of our dire economic situation.
Invest in the market now and reap the rewards of increasing stock values.