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Technology Stocks : Softbank Group Corp

SFTBY 52.98

-0.9%

Dec 1 3:59 PM EST

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To: manohar kanuri who wrote (3797)	2/10/2000 4:27:00 PM
From: TobagoJack	Read Replies (1) of 6020

Supply and DEMAND. Insurance. I know I am not a genius, though we look like one compared to the neighbors. A friend answered my question (why am I worried and should I be worried) with the following ... QUOTE: On the mkt - not concerned- think the productivity numbers say it all - continued expansion with great productivity gains - feel that we are just starting to see the productivity gains that will come from all the computer system updates (Y2K) which not only prevented that problem but considerably upgraded most systems in the developed world. Some wage pressure - but unit wage costs will continue to fall. Expect one more Fed hike - happy with rates- don't see much impact on internet companies or for that matter strict brick and morter. This is not like 1981 at 18% long bonds. Let's say I am completely wrong on rates and they raise 6 more times @25bp each --still only getting to short rates of 8.75%- not a real problem, and you know that would squash the expectation of inflation so long bond rates would fall (further inversion of the curve- so maybe long bond goes to 7.25% at that time -don't see that as a problem, also have less long supply as Treasury buys back debt). Higher short rates will hurt margin loans and firms will cut the loan percentage, but what is the worst reaction the mkt would have - at most 25-30% and then all the bond boys would say that the Fed has done more than enough and would buy right back in - thus setting up a long term fall in rates. This worst case scenario is highly unlikely. As I look at rates throughout the world, you continue to see Central Banks with a much better handle on controlling inflation and the wild swings we used to have (they are all much more pre-emptive now). As a result, in general interest rates and inflation rates continue to move lower with a much smaller range during each economic cycle. With the internet enabled world producing goods wherever the lowest cost producer is located we will continue to drive costs and prices lower. In fact, my real worry is Marx's lament that capitalism (now in its purest form) will cause massive dislocations of the labor force. Woe be to the nation that does not recognize this and plan relatively quick re-raining programs. Also as you have said before, the internet will lead to a real problem in collecting taxes from businesses and people, as they manufacture and consume in/from the cheapest tax zone. High income tax zones such as Europe and the US have the most to lose if they don't redesign their tax codes as flat tariffs. (And I suppose that could bring us full circle, if they fail they will have to borrow more and raise their rates to attract capital ! but this is some time off.. )

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