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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: ayahuasca who wrote (29350)	10/18/1999 7:35:00 AM
From: IQBAL LATIF	Read Replies (2) \| Respond to of 50167

I think you have covered some very good points, I would like to add where I think I feel that Fed intervention is good for the market. In my opinion, I agree with Fed's AG jaw-boning. The whole game is that may be it is not Fed's duty to monitor the market but it all boils down to 'consumer spending', the Fed wants to keep asset inflation under a lid so as to keep economic growth powered by huge spending under some control. We all know that there is a direct co-relation between asset wealth and spending pattern. The equity premiums in last decade have nearly ceased to exist from 10% they are down to 2%, I think AG wants until more prove comes out that these premiums should head back to 4% so that banks may not suffer a capital wash off in case of glaobal meltdown. On inflation I think your point is quite valid, here we are in a middle of a test, if we have all these productivity gains going why should we have such a high PPI number, a person like me who considers himself to be a new- paradigmers needs answers, I would think that if you closely examine the PPI number you would find that PPI gross spoke up like a rocked and took out the 1% level however, excluding food and energy it was .8 if you exclude food energy and tobacco PPI chart will depict that 0.1 % is in line with the expectations. .now those of us who fail to read the fine print and run for the door and keep calling a disaster every other day should look back at this chart of PPI excluding food, energy and tobacco, the 95 rate increases were preceded by this crossing the 2% mark, it even reached nearly 3% when the prices of commodities were in dire shape, I am more worried by ' PPI excluding food energy and tobacco' than PPI it self, I think that lot of cyber bandwidth has been wasted since Friday on a coming doom on the anniversary of 18th Oct 1987, last year and year before, we had similar issues highlighted, for me market is to be traded daily and I think we need to have an objective view of the market and macro-economic fundamentals, we should not start loving our long positions if contrary data appears, perhaps right now it is the time to look at the data carefully and trade important supports aggressively, like a fall below NDX 50 days MA or a break of DOW below 9800 but so far what I see from PPI as I plot it over last two years I don't have much of problem, the real test of PPI comes from pressures excluding food energy and tobacco, some of these rises in tobacco autos are one time phenomenon, and energy too from lows of 10$ just six months back we are moving higher, in % age terms it may sound too much but actually we are coming out of the commodity price one way fall that was threatening the global recovery, we could not have continued with this one sided price deflation, the global financial structure would have had suffered serious consequences if this commodity decline would continue, right now we are seeing commodity prices being stabilized however, this may result in some months of wrong interpretation but over all I see this as a good fundamental recovery. I worry the most about financial defaults that is more worrying and 'commodity' stability removes that worry, that paves the way for a stable global investment environment.. Rising prices from a low base is a interesting phenomenon. From lows of 10$'s to highs of 25$ we have seen a 150% move up, that is how it is reflected in ?inflation figures? however in actuality we are at the same level from where as result of 'global deflationary fears' the commodity decline started.. and CRB had hit a low a all time low of 178, that was not sustainable level for global US consumers who are the major trading regions of the world, for them to survive we need CRB to edge up as we move up and stabilize we will be hit with these anomalies, we need to be ready for such hits and trade accordingly.. zero inflation is the one thing that markets should fear the most.. a little inflation may be the right dose as you say even a .5% RISE WILL NOT IMPACT THE CORPORATE PROFITS IF DEMAND REMAINS GOOD.. In the process if we get some good low equties what's so bad about it..