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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Investor2 who wrote (9614)	11/2/1999 12:05:00 PM
From: Wally Mastroly	Respond to of 15132

Speaking of 'Y2K', Microsoft's starts on Feb 17th (i.e., for Windows 2000): zdnet.com

To: Investor2 who wrote (9614)	11/2/1999 12:48:00 PM
From: Wally Mastroly	Read Replies (1) \| Respond to of 15132

Re: ..wage inflation...? Commentary from www.bondsonline.com: Dr. Jack Doyle's Thoughts on the Markets Week of 11/01/99 Meet Dr. Doyle \| archives An expert recently said about the speed of the biotech revolution that if your head isn't spinning, you're not paying attention. Federal Reserve Board chairman, Alan Greenspan, seems to depend on people not paying attention. And so his Thursday night speech last week was full of talk about need of a slowdown to head off higher rates. Once again he assured us the economy is moving too fast for his taste. And be sure to remember the often-repeated premise – that rapid growth causes tight labor markets and tight labor markets cause increased wages and inflation. There is only one slight problem with all of this. The Employment Cost Index came out Thursday morning at 0.8 for the third quarter, putting it at 3.1 percent for the past 12 months, one of the lowest reads in several years, and with compensation increases in 1999 far below 1998. Once again the Federal Reserve Board resides in stark denial of muted wage pressure. Their prediction of higher wages seems to blind them to an absence of higher wages in the data. Other data confirmed the lack of wage pressure, most notably the gross domestic product (GDP) price deflator at 0.9 for the third quarter and 1.3 for the past 12 months. Our best data points relentlessly to inflation at 1.5 percent or lower and the Fed keeps ignoring it. The case for lower rates has finally been reinforced by signs of weakness in the economy. New home sales fell 12.8 percent in September. This large drop no doubt reflected the havoc of hurricane Floyd, but it was widespread enough that true weakness in housing could be part of the drop. Combine this with a drop in existing home sales and housing starts and the weak economy case starts to look viable. At the very least it undermines the long held bearish case that the Fed is ready for a string of interest rate hikes. Weak housing markets can spread quickly into the rest of the economy. The drop of the University of Michigan survey from 107.2 to 103.2 only adds to the possibility. So the Fed and perceptions in the bond market have moved from multiple Fed Funds increases to wait and see what the numbers tell us. Stock markets around the world have responded favorably to the idea that Greenspan and company may be on hold. The Dow Jones Index and the Standard & Poor's Index look fine while the NASDAQ continues nothing short of miraculous. Somewhere along the line the "trees don't grow to the sky" argument will have its day, but the low inflation, low interest rate, budget surplus story continues in place and if long-term interest rate yields go below 6 percent, the picture will be even better. I would also like to see the commodities research bureau (CRB) index break the recent 200-to-210 trading range on the downside to lock in the low inflation story. The plunge in gold this morning will help. If oil breaks $20.00 that should do it. Conversely $24.00 oil and the CRB above 210 would carry the opposite message.