EMC How high can it go? Message Board

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Technology Stocks : EMC How high can it go?

EMC 29.05

0.0%

Sep 15 5:00 PM EST

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To: Jill who wrote (9047)	1/30/2000 12:17:00 PM
From: Bill Fischofer	Read Replies (6) of 17183

OT: Interest rates It's said that generals always fight the last war and sadly the same can be said for Fed governors who remain haunted by the ghost of 1970s-style inflation despite the continuing lack of any credible evidence of its return. As Harry Dent and others have observed, ironically it is the inflationary past which was the anomaly rather than the present noninflationary growth. Dent's case that long wave macroeconomic cycles are driven by demographics and technology cycles is compelling and is required reading for anyone who wants to really see the big picture. What makes the present environment so uniquely bullish is the confluence of the demographic peak of the post-WW II baby boom with both 80 and 500 year technology cycles. Quite simply, the Internet is bigger than the Fed and bigger than any nation-state. Nothing of this scale has happened since the invention of printing in the 1500s. The genie is out of the bottle and trying to shift the course of this flow with tiny adjustments in the cost of short-term borrowing in one corner of the globe is like trying to change the course of the Mississippi by tossing pebbles into it. If one examines the various statistics that CNBC and others fret about, the root "inflationary pressures" are twofold: Oil and Tobacco. Oil prices are up because OPEC has found a margin of short-term discipline with the West's tacit approval. To understand this one has to appreciate that Russia's only real source of hard currency is oil. At $12 a barrel Russia was being suffocated and after the 1998 defaults further aid through the IMF became politically impossible. $30 oil is a cheap price to pay to avoid Russian disintegration leading to chaos across a sixth of the planet that still contains thousands of nuclear weapons. (Higher prices also help stabilize the Middle East, particularly Saudi Arabia, but that's another story altogether). So the correct way to view higher oil prices is as a sort of global aid package which is integrated into the market structure rather than being directly funnelled into the Swiss accounts of corrupt officials. The second "inflation problem" is tobacco and is entirely a statistical artifact of the construction of the PPI and CPI coupled with the self-inflicted damage of the tobacco settlements. In short, tobacco companies have sharply raised the price of their product to pay for these settlements and only because of the way the statistics are constructed is this viewed as "inflationary". As such, this "inflation" is completely bogus. Tobacco has no place in the PPI and should be corrected in the CPI by splitting the CPI into a CPI-s (for smokers) and a CPI-ns (for non-smokers).

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