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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 687.72+0.7%Jan 5 4:00 PM EST
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To: solihull who wrote (76736)5/10/2001 12:15:31 AM
From: t2   of 99985
 
John, My take on the labor market is the same. Wage pressure downward in return for job security. I have seen a few of the reports with announced pay cuts.
Also agree that wage pressures will not be there. For now we are just seeing a lag between the time the job cuts or wage freezes are announced and when the show up in the data. That is why Greenspan has made it clear that he is not fighting inflation.
Same applies to the weekly jobless claims that spooked a lot of people last week with an over 400k new claims number. Of course, later we got commentary that this is normal..and we could see rising claims even when the economy is on the upswing.

The other key factor that will prevent inflation in the near term is the strong US dollar.

If the Europeans cut tomorrow, I would bet on a stronger Euro...which may seem kind of odd for a currency to gain on rate cuts. However, that is what the US Dollar has been doing lately, leaving a lot of currency analysts confused.

My concern also is loan defaults but I am not trading off that worry just yet...that could be a late summer thing. A lot can before then, such as a wealth effect if the market gains which would offset some concerns about debt levels. Just choosing to ignore the loan default issues as long as the economy does not get much worse. If the bottom is reached in a month or so, banks and tech are in good shape, IMHO. Tech spending will be a big key and I have been reading more positives in this area lately...much more than a few months ago.

You are right..it is like walking a tightrope.
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