Econ Analysis: excellent interview on CNBC of two blokes
Gustafson (a portfolio manager) and Christopher (from AGEdwards)
Gus was the force here
he thinks stocks are set for serious rally, led by techs
with steam picking up after Fed hike
he loves chips, fiberoptics, storage
he loves Altera, Uniphase, Corning, EMC
he considers Corning an emerging giant supplier in fiber
he was harshly critical of the Fed economists (shared by me)
he said they live steadfastly by the Phillips Curve
it claims that as unemploymt declines, inflation rises
like any stat analysis performed in a vacuum, it fails
this relationship has been shown to be deeply flawed for three years now
it fails to account for Mexico and Canada in our unemploymt rate
this expansion of labor market is the beneficial consequence of NAFTA
one must include at least five other factors in such analysis
e.g. capital investment, productivity, US$ trends, and the grand intangible (the internet vehicle)
the Phillips Curve mentality is a prime example of the shitty statistical analysis practiced by economists (the most inept statisticians in the country)
Christopher made a great challenging point to Fed Board
he challenges Fed to point to where inflation exists
he focuses on the CPI, virtually flatlining for months
he doubts the need for a Fed rate hike
he thinks they want to hike rates
we got a 25 bp hike coming, fully factored in bonds
I expect the usual response by stock market
shorterm: relief that no new hikes in next 7 weeks
shorterm: diminished threat of inflation (i.e. Fed is vigilant
thus shorterm a stock rally
nearterm: another 25 bp rate hike might loom over market
thus nearterm more valuation angst later (like weeks)
/ Jim Willie |
