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This one might be up for debate: "The good news is that the economy, not previous overspending, is the main cause for the

capital expenditure slowdown."

That's what

Merrill Lynch

technology strategist Steven Milunovich wrote in a comment published on Tuesday. While overspending during the tech boom of last year is most definitely not a good thing, taking solace in the fact that the eventual market downturn was a result of a dip in the economy as a whole isn't too refreshing either.

Milunovich included this bit of comfort in the prologue to the results of a survey he conducted among 50 U.S. and 15 European chief investment officers. The comments that followed within the survey, while true to the responses, weren't much comfort either.

"We figured there is a chance for 'catch-up' spending late in the year given the use-it-or-lose-it nature of IT budgets," wrote Milunovich. "CIOs weren't encouraging. We read this as a view that the economic weakness will last throughout the year."

Milunovich also included several lessons learned from the CIOs he polled. Perhaps the most disheartening was "slow and steady wins the race" -- billions of dollars spent and lost, and we could have learned it all from a turtle instead.

Taking a Stance

There's a contention that the current market rally will be a short-lived phenomenon, and that the lows will be retested. But Jeffrey Applegate, investment strategist at

Lehman Brothers

, doesn't think so.

In a moment deserving of this week's

Gutsy Call

, he wrote in a report on Monday that "the enervating bear market of 2000-2001 now appears to be finally behind us." He adds that "if history continues to be a guide, the troughs in the economy and profits lie several months ahead -- troughs that the market has already discounted."

Applegate compares recent trends with those of the market downturn of 1973-74, illustrating the similarities and predicting, as in the earlier market cycle, that we will now see one-year returns on equity "in excess of 30%."

And in a moment of pure brash inhibition, while discussing last week's surprise

Fed rate cut, Applegate penned that one interpretation is that "the Fed is merely reinflating the asset bubble that it helped create in the first place. We dismiss that as a quack view." Give the man a harrumph.

He Said, He Said

But Greg Smith, chief investment strategist at

Prudential Securities

, doesn't quite see things that way. "For the overall market, as expected we received a trading (bear market) rally in early April," he recently wrote. "I think the rally can last into May, however, I suspect that by June, we will have a correction and retest the lows."

Smith does concede a little, if not by condemning the analysts (who would do that?). "Among analysts, it has been very fashionable to lower 2001 earnings estimates for the


," he continued. "If anything, at current levels earnings estimates may have been cut a little too far."

That's Eerie

Couldn't get away without an equity analyst this week

And we're even going to give her the props she deserves. In a frighteningly prescient move,

Credit Suisse First Boston's

Bonnie Herzog put out a research note on Wednesday discussing

Philip Morris



The note simply stated on line one that, "we think that there is a good chance that Philip Morris leads a cigarette price increase this Friday, April 27."

Well, Philip Morris decided instead to up their wholesale cigarette prices that afternoon, just hours after Herzog's note. Within the report she discussed the factors involved, largely the need for higher margins to offset payments in the near future for the $206 billion master settlement agreement, the settlement from a 1998 lawsuit against the tobacco industry, as well as the end of a current sales promotion. But still...

Either Ms. Herzog's a fine analyst, or she's got psychic abilities.