Twick.. just look at this..
economics.about.com
Now look at the grey area, now please tell me at present unemployment rates where is recession? Now we are seeing the stability in umemployment, like we saw low interest rate environment extending over decades, here we are seeing that new economic laws are being formulated, we are seeing unmployment at 4% AND WE worried about a huge recession, previously this use to be areas where we had 5.5% to 6% look at 1991, NOW EITHER economy ground rules as a result of productivity has changed that is what we say, or we are going to see a massive slow down. Now to see that retail sales should have been dropping, capacity utlitisation should have gone to much lower than traditionally high 80%, so if all the pointers are showing great strength. I would assume that we will see a nice economic landing..In that chart above please look at areas where FED intervened in 1995 we had seen spike up in un employment, we saw that NAIRU now is finally burried or what we call as Philip curve, we saw that unemployment kept coming down with huge gains in GDP without triggering inflation..Look at inflation charts..http://economics.about.com/money/economics/library/chartroom/blcrcpi.htm
note that without food and energy we have a very dormant CPI even in 2001.. not that carefully!!The energy prices have brought this up considerably nad odn't forget that these prices are 'politically sensitive', this huge transfer of wealth and fortune gives some stability to theOECD, in 1997 the world system was collapsing as commodity prices went to dogs..The balance has to maintained, if we see now slower growth that would lead to slower commosity price presssure, I would have no case if inflation would be showing in less food and energy charts too..
<<As far as "Naz 3400 and DOW 10,250 by August"... I'm interpreting this as a bear market rally on the NAZ due to technical/oversold conditions. Nothing more. If you don't see the DOW higher by August, then we're not looking at a broad participation in the markets that could validate an economic revival. The DOW is made up of some of those tech companies that are in the NAZ and SPX. Right ?>>
I think we need to overcome this 'valuation' approach fears! I woul assume that we need two quarters of plus 5% percent growth for taking PEG of Tech group back to 1.6-1.9, I would think that right now we are trading at 1 or even below 1 in some instances..I think you missed that post where I tried to reason this NAZ DOW divergence, in my opinion, DOW multiples of 21 contain less of growth more of security whereas NAZ at 38 contain more of growth and higher risk,for PEG of NAZ to reflect higher risk propensity of the investors we need some time, I would think that 3400 is above that key 3028 area and a good 35% from here, ...I think that it would be in third and fourth quarter that real dividends from these cuts shall be apparent.. on that count I would assume that we will end the year at 4200-4400 area. |
