Slider: Inflation, Productivity, and Greenspan
I am publishing this link to a recent Greenspan speech here as it may give us some insight into the thinking of the world chief central banker.
business-times.asia1.com.sg
There are some striking things about this speech.
1. Gold, Oil, indeed any commodity prices are virtually absent from his remarks.
2. Productivity enhanced by info technology are the key focus.
3. He sees this productivity spreading across the world.
4. His main worry now is wage increases in the US, due to the incredibly tight labor market, not commodity prices.
My conclusions from his remarks.
1. Yes there will be rate hikes but they will probably be his typical inch meal .25 hikes in the fed funds rate.
2. All he really wants to do is tap the brakes, not slam the brakes. He just wants to bump up unemployment a tad.
3. No huge Volkeresque invert the yield curve shock tactics here.
4. He see no need to induce recession - yet.
5. The old benchmark of $20 oil ceiling is dead, higher oil prices can be sustained here due to increasing productivity.
Does this mean the end to cyclicality as we knew it. Nope, just that this cycle may be of longer duration. OSX 110 - 120 is a good liquidation point, for most OS equities. I am now thinking that it may not be the top for this cycle though. You had published somewhat similar views in the past, stating, I believe, that the penultimate top of this particular OS cycle could take out the last cycle high. If those are, where, or continue to be your beliefs, I am in accord with them.
Maybe it works like this?
1. Dump at 120
2. Re enter at ~90
3. Sell into the rally to +160 |
