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Technology Stocks : JDS Uniphase (JDSU)
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To: Jill who wrote (4290)1/11/2000 4:05:00 PM
From: Michael Dean  Read Replies (2) of 24042
 
Jill and all

Certainly the market is showing concerns about interest rates, but Mr Greenspan has to walk a very tight line. If you subtract out increasing healthcare costs, the remaining rate of inflation is very low. Deflation is a real possibility and is too frightening to contemplate. Would you by a car this year if you knew the same car would be cheaper next year? Only if you desperately needed it, or if it was vastly superior to the one you own.

Unemployment is very low for sure, but most of the new employment has been in lower paying and part time jobs, many of which could be eliminated by further capital investment, imports, etc. The holders of many of these jobs would happily move up - it is a training and education issue.

Too large a rate increase could choke off global growth at just the wrong time and push us into a deflationary spiral.

As I said he has a very fine line to tread and I think Mr. Greenspan's hope is that scare tactics and some small rate increases, along with continuing productivity gains, will hold inflation to about its current levels. I hope he is right. Scaring investors like us, who hold large paper profits is another way to cut back on demand and reduce inflation.

I think one preemptive raise of .25 to .5% is all we will see unless inflation surges wildly, BWDIK?

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