Message-ID: <17977115.1075857839175.JavaMail.evans@thyme> Date: Thu, 22 Mar 2001 09:15:00 -0800 (PST) From: kevin.ruscitti@enron.com To: jstamas@carolina.rr.com Subject: Good Buying Opportunity???? Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Kevin Ruscitti X-To: "john stamas" @ ENRON X-cc: X-bcc: X-Folder: \Kevin_Ruscitti_Jun2001\Notes Folders\'sent mail X-Origin: Ruscitti-K X-FileName: kruscit.nsf Stamos, I don't think many buying opportunities out there. The economy is going to get crushed this year. There's only one place to put one's money now, and that is in cash. The manufacturing sector is in dire straits and you will continue to see an increase in plant shutdowns and company layoffs. The Fed could continue to lower rates but there'll be little capital investment if consumer spending dries up. I feel we've just seen the beginning. I think the Dow will be trading under 8000 by the end of April. Psychologically, the California crisis will add to consumer fear. The crisis is not a short term problem. As a result, barring any Federal bailout, you could kiss that state's economy goodbye. Let me ask you a question; if you were paying (1) the highest real estate prices in the country, and (2) the highest energy prices for the least reliable power, in (3) the midst of a hi-tech meltdown, what would keep you or your company from closing shop and moving to a different state?? If you own any CA real estate, sell. The only way to solve the CA energy crisis is to reduce demand or increase supply. Since CA doesn't want any power plants in its backyard, the supply issue likely won't be solved anytime soon. So, how do impact demand?? You have to price energy(power/gas) so high that the discretionary user (household, manufacturer, commercial store) conserves by closing its plant, cutting back on the thermastat or running the commercial operation during off-peak hours. California will see this reduction in demand over time. If the blackouts subside it's because so many businesses have closed their doors for good or moved to another state. Without this, the blackouts will get much worse. If the state tries to get into the business of buying and selling electricity and gas, I would bet it will go bankrupt within 2-3 yrs. Could you imagine the impact on the national economy from the bankruptcy of the U.S.'s most prosperous state. Obviously this is only my opinion, but I would keep my eyes on the energy markets - that's where the key to the turnaround lies. Take Care and thanks for the email. Kevin