[Telecon XVII]
<<<I can be at Telecon XVII on the 7th anytime. Exhibit hours are from 10:00am to 3:00pm that day. Does this work for anyone interested?>>>
I've marked my calendar. And will call Linds this afternoon to see if she'll let me spend the night at her apartment. Speaking of which (life at UCLA), did you notice the Bruins creamed Cal???? (Sorry, jaime.)
Turning now to global issues, the LATimes business section has a compelling article by Tom Petruno, "Is the More Troubling Story Asia--or Boeing?"
<<<Months from now, we may look back on last week's market turmoil and realize that the most important news event . . .had absolutely nothing to do with Hong Kong. Rather, it may turn out that the much bigger bomb was dropped by Boeing Co., which stunned Wall Street last Wednesday by announcing that it expects to take up to $2.6 billion in write-offs against earnings because it can't fill plane orders on time.
Unintentional though it may be, Boeing is making Federal Reserve Board Chairman Alan Greenspan's worst nightmares come true. The Fed chief has warned repeatedly that he fears the consequences of continuing brisk U.S. economic growth in what has become the tightest labor market in decades. Boeing conceded that it simply can't train workers fast enough to keep up with demand. Parts shortages also are hampering
production, which may be a telling sign that the aerospace industry
cutbacks of the early 1990s went way too far.
Is Boeing's problem unique? In terms of scale, perhaps. But there is no dearth of anecdotes from companies around the country complaining about the difficulty they face in filling jobs--or at least filling them with people who are even remotely qualified (and thus likely to be productive, rather than the equivalent of sand in the gears). . . "
Petruno concludes that the Asia mess may cause the Fed to rethink its position on raising rates and may, instead, have to act to keep the world economy from becoming deflationary.
". . . At the Fed, the discussion now will have to include two
possibilities: First, that the global economy might slow markedly,
rather than accelerate, in 1998, thanks to Asia. A "preemptive" Fed
thus might have to consider whether the true preemptive move would be to maintain easier credit, to assure the U.S. economy doesn't slow too much next year.
Second, the Fed will have to mull the idea that Asia's mess will
be significantly deflationary for the world economy, by cutting prices
of Asian exports (perhaps including China's, which must stay
competitive with its currency-devaluing neighbors) and forcing
competitors worldwide to follow the same course.
Deflation can be a good thing, if contained. But if it runs rampant
because the supply of goods suddenly far exceeds demand, it can
be ruinous for corporate earnings and, ultimately, stock prices.
Two very different markets rang the deflation bell last week:
Japan's bond market, where investors were willing to accept a
record-low yield of 1.67% on 10-year government bonds, rather
than put their money in, say, Japanese stocks. And the gold market,
where bullion prices fell to a 12-year low of $307 an ounce by
Friday, ostensibly reacting to the possibility of heavy Swiss
government gold sales. But that decline also smelled of deflationary
expectations. . . .>>>
For complete text:
latimes.com
Is there any way to monitor the Hong Kong market tonight? If you or anyone knows how, it would be great if you'd post here before the open.
I look forward to meeting you in LA!
Cheers!
Pat |
