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Technology Stocks : Semi Equipment Analysis
SOXX 330.38-4.4%Feb 4 4:00 PM EST
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To: Jess Beltz who wrote (15105)5/11/2004 10:21:25 PM
From: MrGreenJeans  Read Replies (1) of 95865
 
For What It's Worth: It appears to me that the market has already priced between one and two full rate hikes into the stock prices.

The reaction by investors over these potential rate hikes has perplexed me. The US economy is booming and at even higher rates would still function quite nicely.

The final caveat, however, is that the economy almost by definition cannot continue to grow without the eventuality of demand for goods and services outstripping supply, and when that happens, prices will increase and that's inflationary pressure by definition.

Unless of course productivity is strong which it has been.

Finally, we may be strangely fortunate in one regard. Energy prices have been steadily climbing. They are a key component in the core measures of inflation, the PPI and CPI and yet inflation seems to remain very much in check.

Energy and food prices are usually stripped out of the inflation numbers by economists to get a truer measure of inflation without the more unstable components distorting the measure.

One last thought, I have worked as an energy economist for more years than I will admit too and I suspect the world is awash in oil from select OPEC countries producing above their quotas. I suspect the spike in oil prices is more political than fundamental and expect oil prices to fundamentally move lower in the months ahead. (Famous last words.)

MGJ
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