Courtesy of Edward Harrison of Credit Writedowns
Since Cicso’s miss earlier this month, a lot of people have been talking about technology and capital investment. Cisco said its miss was more about government spending, but we should still ask whether capital spending in the private sector is going to deliver.
During the end of the tech bubble, channel stuffing became widespread. Is the same about to happen here again? Herb Greenberg says some serious stuffing could be happening and suggests analysts make enquiries to find out to what extent. From a macro perspective, this is significant because government stimulus is petering out while real wage increases still remain subdued. So we can’t expect this to be a consumer led recovery until we see more income growth. Seeing capex tick up, especially in tech, would be a good sign to that end.
(CNBC video below)
Originally posted at Credit Writedowns, Why investors should beware tech’s strong fourth quarter.
