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And from the "Safe Money Report" today...I found this interesting...

"This morning, comments by Intel's Chief Executive Craig Barrett's comments sent semiconductor stocks shooting higher. Barrett said Intel is "in the middle of upgrading and buying a substantial number of PCs and we see some other examples around the world that that is happening."

We don't know about you, but we've just got to ask: "What the heck are stock buyers thinking?" Every little comment about the sale of an extra computer or chip or cell phone seems to spark furious rallies. But nobody's stopping to think about the fact that sales are still way down from bubble heights -- or that the supposed "rebound" is likely just a temporary blip. Indeed, investors are reacting to every nugget of tepid news as if it's proof that profit nirvana is just around the corner.

Take Broadcom for example. This week, the chip company said revenue in the current quarter will likely come in at about $416 million. That was above its prior sales forecast of up to $410 million. Just in case you don't have a calculator handy, that means revenue might exceed expectations by a whopping 1.5%. And yet, investors latched on to the announcement like it was the best news they ever heard, bidding the stock up 11%. Since October, Broadcom's share price has more than doubled to around $25 -- giving it a price to earnings ratio of 225!

Frankly, investors are acting like its 1999 again. You know what happened then, and we wouldn't be surprised to see a similar meltdown this time around."

And one more article, just for the heck of it...

Fund Spy
A bond manager sees more pain ahead for bonds

The 10-year bond is now yielding about 4.6%. Is it headed for a 6% yield?

By Russel Kinnel

Last week, I wrote that most bond fund managers believe the worst is over. But, of course, not everyone thinks that's the case. In June, FPA New Income (FPNIX) manager Bob Rodriguez shifted from cautious to downright bearish.

He declared a buyers' strike against Treasurys because their yields had dropped to record lows despite the fact that tremendous liquidity had just been injected into the economy via tax cuts and Fed rate cuts.

At the time, Rodriguez noted that the stock market's rally signaled a healthy growth spurt in the economy while the bond market was signaling sluggish growth or a recession coupled with deflation. He said the stock market was more likely to be right in this case. “Low interest rates and easy money are combining to set the stage for rapid economic growth. Over the next twelve months, it would not surprise us to see real GDP grow faster than 4%,” he said.

Actually made money
His bearish stance soon paid off as the bond market was pummeled in July, and his fund was one of a handful to actually make money for shareholders.

Despite the spike in rates, Rodriguez isn't tempted to go back in. Although the 10-year Treasury currently yields 4.6% (as of Thursday), he won't begin buying until it hits 5% -- and even then, he'll only gradually ease in. (To find today’s 10-year note yield, check Leading Indexes on MSN Money.)

"This is only the start of a longer period of difficult bond market returns," he told me. "The base level of U.S. inflation is still in the 2% to 2.5% range," he said. "Given a minimum real return of 3% (that is, at least a 3% return above the rate of inflation), this would place fair value on the 10-year T-bond in the 5%-5.5% range.... It would not surprise us to see the 10-year T-bond yield rise into the 5.25%-to-5.5% range within the next 12-18 months."

A three-year quagmire?
As if that wasn't depressing enough, Rodriguez says there's a decent chance that bonds will be a quagmire for three more years.

"Assuming President Bush is re-elected, we expect that the odds of a difficult bond market in 2005 and 2006 are also rising. The combination of growing government entitlement debates along with a likely weaker dollar makes for a difficult bond market environment. Longer term, it would not surprise us to see the bond with a 6% handle (i.e., a yield between 6% and 7%). . . . The important thing to remember is that the bond bull market of the last 20 years is over. It will be more difficult managing bonds from the long-only side going forward."

Mind you, most bond managers are a little more optimistic than that. Rodriguez really hates to lose money, so he'll gladly err on the side of caution when it comes to protecting principal.

A bond manager sees more pain ahead for bonds

We don't know about you, but we've just got to ask: "What the heck are stock buyers thinking?" Every little comment about the sale of an extra computer or chip or cell phone seems to spark furious rallies. But nobody's stopping to think about the fact that sales are still way down from bubble heights -- or that the supposed "rebound" is likely just a temporary blip. Indeed, investors are reacting to every nugget of tepid news as if it's proof that profit nirvana is just around the corner.

They want...no, they NEED to believe. They have to keep believing that the elusive "2nd half recovery" is always around the corner. The have to keep up the act, because they know that they are in to deep to get out and the reality of what is to come is to unsettling to think about. But denial is not a river in Egypt.

Barrett said Intel is "in the middle of upgrading and buying a substantial number of PCs and we see some other examples around the world that that is happening."

Barrett should check with his CFO. From Intel's Q2 Conf Call 7/15/03:

Chief Financial Officer Andy Bryant said Tuesday that the company isn't seeing any evidence that a corporate replacement cycle for computers is occurring.
Bryant noted that Intel has restarted a program to provide Intel employees with one home PC each. He said the program should be completed by the end of the year, with most of the costs coming in the third quarter. Intel had put that program on hold in 2001 as the company cut nonessential spending to address the downturn.