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- THE FRIDAY LETTER -
(emailed weekly, from Gilder Publishing,
for friends and subscribers)
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| http://www.gilder.com/ | Issue 257.0/July 28, 2006
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HEADLINES:
- The Week / AMD Stays in
the Game
- Friday Feature / Steve
Forbes: Expect More Turbulence
- Friday Blogger Bonus / Kudlow on Bernanke
- Readings /
|
Gilder/Forbes
TELECOSM Conference |
The Week / AMD Stays in the Game
GTR Tech Analyst Charlie Burger (07/21/06): Torrenza. That’s the program under which Advanced Micro Devices (AMD) licenses its high-speed interconnect
technology to customers, who can then connect their coprocessors directly to
AMD processors via expansion slots. In some cases the coprocessors can be
integrated onto the same chip as AMD’s cores. Torrenza
could create new business for AMD in specialized systems. Perhaps more important,
it reveals the innovative environment that CEO Hector Ruiz has nurtured at AMD.
It’s the fighting spirit that enabled Ruiz to give Intel the runs and that will
keep him in the game for good.
Here are four accomplishments Ruiz can boast about: During the second quarter,
AMD’s revenue rose 53% over the year ago quarter … it was the twelfth
consecutive quarter in which microprocessor sales grew more than 20%
year-over-year … Opteron processor sales grew 26% sequentially
… AMD likely gained share in the server processor market.
Regardless, the news has been
dire about how much pain Intel (INTC)
is inflicting on its nemesis. True, AMD’s sales were down sequentially primarily
because of cutthroat pricing for high-volume desktop processors. The slashing
also took gross margin down a bit. But Intel has wounded itself in this war as
well. Its gross margin and sales have suffered more than AMD’s, and it’s
warehousing a glut of aging inventory.
With an aggressive new lineup
and its timeline lead on advanced processes, Intel will likely keep the heat on
its rival ….
Can Intel keep the heat turned up until the second quarter of next year, when AMD
will begin rolling out new architectures? Will AMD be able to muster the resources to
continue to fight the war?
Find out by
reading Charlie Burger’s complete post on the GTR subscriber-only massage board. Just visit http://www.gildertech.com/ and log in
with your GTR subscriber ID.
RELATED
Intel Declares War
http://www.forbes.com/2006/07/20/intel-earnings-amd-cx_ck_0720intel.html?partner=technology_newsletter
|
The
End of Medicine, by Andy
Kessler |
Friday Feature
/ Steve Forbes: Expect
More Turbulence
Steve Forbes:
Fed Chairman Ben Bernanke's
Congressional testimony a few weeks ago was a disappointment. Investors and
executives better expect more turbulence and higher interest rates.
The man is still underestimating inflation--despite the
sky-high levels of prices for gold and other commodities. More disturbingly,
the Fed boss hinted that inflationary pressures would be easing because of a
slowing economy. Bernanke and the Federal Reserve
bureaucracy still seem to cling to the notion that growth causes inflation. It
doesn't. Excess money creation does, as Milton Friedman conclusively
demonstrated decades ago. The destructive idea that there's a tradeoff between
inflation and economic growth has unnecessarily retarded our expansion and
capital markets in the past. Experience has shown this idea to be nonsense.
Both the 1980s and 1990s saw vigorous growth and declining inflation.
Bad ideas are sometimes harder to kill than obsolete government
agencies.
Ben Bernanke's education in
central banking, alas, is going to be a long one. So far this student is
proving to be a slow learner.
Read More of “Fact and Comment” by Steve Forbes:
http://www.forbes.com/columnists/business/forbes/2006/0814/027.html
Hear Steve Forbes speak, October 6, at Telecosm 2006:
http://www.forbes.com/columnists/business/forbes/2006/0814/027.html
|
A N N O U N C I N G : The
Gildertech Blog |
Friday Blogger Bonus
/ Kudlow on Bernanke
Larry Kudlow
(06/21/06): Bernanke was a lot
tougher in yesterday’s House Financial Services hearing. He was much more
hawkish. In response to a question posed to him, he replied that the core
inflation pickup is broad based, and not a statistical illusion from the
owners’ equivalent rent component of the CPI.
Gold prices fell almost $10 dollars, nearly erasing Wednesday’s gain (which in
some sense was based on a dovish misreading of Bernanke.)
If the Fed is data dependent, and if Bernanke
believes that the core inflation pickup is broad based, then more fed rate
hikes are in the cards.
Reuven Brenner’s article on National Review
Online (“What’s Wrong with Fed Policy”) makes the
important point that the Fed should be using a liquidity management model based
on commodities including gold, the yield curve and the dollar exchange rate to
guide policy, rather than an interest rate and unemployment rate management
approach.
My reading of the Fed is that they’re essentially using both. They will
continue to target the Fed funds rate with one eye on the TIPS bond market
yield model, with perhaps a glance at commodities and the dollar, but their
other eye is unfortunately still trained on the Phillips Curve tradeoff between
inflation and unemployment, with various references to capacity utilization,
output gaps and other economic growth speed limits. This stuff is what gets the
Fed into trouble because inflation is a monetary phenomenon.
Think of it this way, over the past ten years, non-financial productivity has
grown at a 3.5 percent annual rate with labor force growth at least 1 percent
annually. That means the economy’s potential to grow is actually about 4.5
percent per year. With continued low tax rates on investment, plus a capital
goods investment recovery cycle in hand, the idea of economic capacity
constraints makes no sense at all.
The reason the dollar is weak is because there is still a modest excess dollar
liquidity position in relation to demand. I still don’t think it’s a huge
excess, but I’d like to see a stronger dollar and a narrower TIPS spread.
All that said, the Fed will get there in the months
ahead.
Check out Kudlow’s
Money Politic$ blog:
http://kudlowsmoneypolitics.blogspot.com/2006/07/more-on-bernanke.html
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