Here is a REALLY contrarian view. . .so America's domestic output is high. . earnings are high. . .employment levels are great. . .confidence in future earnings are way high. . . .and nearly every company in America is more productive now than at any time in their history.
Does all of this mean that inflation must necessarily follow?
It used to mean that, because it took LABOR to get all that productiviy. . . but now it takes computers, robots, the internet and other automation to achieve it. And with so many companies selling directly to the public via the internet. . and having the internet to dump their surplus or overruns. . . profit margins are growing in proportion.
Less waste, means more profit without a hike in the retail prices. . . meaning perhaps that we may not see the inflation that is being sold us. Sort of like the hype of Haley's Comet. . .yet WHAT a disappointment.
So perhaps productivity, wholesale prices, retail prices and labor are not as intertwined as they used to be. . .
our Federal inflation indicators have not been adjusted to compensate for the computer and internet revolution.
There is no direct indication of inflation, yet tomorrow we fully expect Greenspan to hike rates by a quarter point. And I expect he will do so, as well.
But the question is this. . . .could he recognize that with no real inflation indicators, there is no "real" need for a hike. . . just an imagined one? Doubtful.
I am getting a feeling that he may raise the price, but not hold the bias toward tightening. . .if so, this could trigger a rally that would continue right thru the summer earnings of blue chips, IMO.
It is sort of like the Dow average meaning less and less to the market as a whole. Look at the Dow, then look at your own portfolio. The resemblance is fading. . .yet we have not adopted a new index that better tracks the majority of trading that occurs of late.
It is certainly an interesting consideration.
Rande Is |
