BEA Systems (BEAS) - Undiscovered Growth Stock Message Board

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Technology Stocks : BEA Systems (BEAS) - Undiscovered Growth Stock

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To: softcash who wrote (572)	8/27/1998 9:45:00 AM
From: growthvalue	Read Replies (2) of 2477

Look. A rate cut is premature in this environment given that: -median price of a used house is rising at a 5.8% clip -money supply is growing at 7.3% - the fed targets 5% or less -domestic demand rose at 6.3% in Q2 -unit labor costs rose 4.1% in Q2 -CPI rose 1.7% for the 6 months ended July (this is higher than the 1.6% increase in the 6 months ended January). -"core" CPI (ex food and energy) rose more than 2% These last two pieces indicate INFLATION. A rise in the CPI is INFLATION. Yes it is low, but look at a graph of the CPI - it is flattening to slightly increasing. And while depressed commodities and imports are having a slightly cooling effect on our aggregate numbers, the consumer spending and real estate are WHITE hot - and this makes up over 2/3 of our GDP. "nifty fifty" notwithstanding, the impact on GDP of Asia and especially Russia is minimal. In addition, what impact it does have is largely offset by cheaper prices for commodities. (oh yeah, CPI is rising at greater than 2.5% in the UK and their money supply is growing faster than 10%). In other words, don't hold your breath for an easing until our economy actually does start to slow down. re: Y2K. Software companies are seeing weaker US sales, not just international sales. Two of the companies you mentioned contradict your own argument - ITWO is seeing weakness in the pipeline in EUROPE and CA SPECIFICALLY cited reduced spending due to Y2K remediation. Other companies with MORE exposure to Asia and international markets have corrected LESS than software stocks. This was my original point. How can macroeconomics or Greenspan's "incompetence" explain this? PERHAPS there is something INDUSTRY SPECIFIC that is causing this. When an entire sector does MUCH more poorly than the overall market, usually there is something happening IN THAT INDUSTRY!!!!! What do you think that could be???

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