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Politics : Idea Of The Day
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To: the options strategist who wrote (26072)5/6/1999 11:55:00 AM
From: N  Read Replies (1) of 50167
 
You're welcome, jj. Here's what got my attention in ag's speech:

Well,

Under these circumstances, inflation premiums embodied in long term interest rates would doubtless rise.

surely must have delighted the bond market.

‘These circumstances' are ag's conjecture that 7 years of a great economy have come from tech driven labor productivity growth. Ag's sanguine humour patiently transforms a ‘new era' economy into one
where he will consider the economy is experiencing a bump to long term trends (the boost to labor productivity from tech) rather than a bounce around trends.

Then he lists all the ‘circumstances' -- no more labor to employ, mainly, with a swirl of consequences -- where this could come to a pause.

Btw, nice swipe he took at security analysts!

This view [that profitability from tech driven cost cutting] is reinforced by security analysts who presumably are knowledgeable about the companies they follow. This veritable army has been projecting increasingly higher five-year earnings growth...While there are ample data to conclude that these estimates are biased upward, there is scant evidence to suggest the bias has changed.

Ag has also fessed up that Phillips curves models of unemployment/inflation tradeoffs don't predict inflation awfully well!

Regards,
Nancy
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