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To: Mark Fowler who wrote (73452)	8/12/1999 6:12:00 PM
From: GST	Read Replies (1) \| Respond to of 164684

Mark: The pattern which has held prices down for years now may be reversing. Productivity is only part of the low inflation picture -- as I am sure you must realize. Global investors have been realigning their portfolios for a reversal of the global deflationary pattern since the day they sensed an upturn in Japan -- June 10th. Gold is rallying. The price of oil more than doubled in the last six months. And other commodities have put in bottoms after a multi-year decline. The excess capacity of the rest of the world is declining. The dollar has dropped. And US labor markets are tight as can be. The stock market has created untold paper profits as a result of the multiple expansion made possible by the global economic situation. High multiple stocks were so attractive because the multiples just kept on expanding and then expanding some more -- leading to talk of 'new' valuation models to explain how they could possibly be so high. If the global pattern is reversing -- and that seems to be the case -- then these multiple expansions are history and they will come down -- which is what we are seeing already. Everything points to a weaker dollar -- but a low ppi number will stave off the reckoning and could propel the market with one hell of a relief rally. A high ppi will cause the dollar and the stock market to sell off -- good for gold though.