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

To: Lee who wrote (29881)	12/1/1999 2:25:00 PM
From: MeDroogies	Read Replies (1) \| Respond to of 50167

Lee, I think NAIRU is significantly below that rate now....there are very few areas of employment that I think could be called "tight" in the traditional sense. Large numbers are changing jobs frequently. Perhaps the tightest market I've seen is the "macjob" arena, where low level positions are now being filled by offering slightly better wages, but with upfront payments of cash - bonuses, if you will. These one time payments aren't inflationary, in the traditional sense, since they are one time payments. They aren't paid out alot, because to collect you must stay on the job for a specified period of time. On the flip side...areas that ARE tight (programmers, sales) are paying more in options than wages. I know. I just changed jobs for the same salary, but a better options package. This, too, is non inflationary in the traditional sense. These changes have created a situation where you could argue that NAIRU is actually closer to 4 - 4.5%. Making the US a somewhat "stable" economy at the moment...price-wise.

To: Lee who wrote (29881)	12/2/1999 11:59:00 AM
From: IQBAL LATIF	Respond to of 50167

<<Do you anticipate any buying in U.S. treasuries for parking money temporarily because of Y2K?>> I do expect some buying of bonds, as you know it well it will be bond yields that will impact the market leaders slow and steady as realisation sinks in and the moment market goes through any kind of srious retracement bonds becomes a natural safe heaven. At a certain point bonds does offer that win-win trade that we were lucky to pick up last time when we had yields approaching 6.50%, acutally bond market is always a step ahead of equities, for me this is good as the bond markets do act like a safety valve in face of excessive runs, even if no inflation is visible bonds undo euphoria by seeing 'excessive asset inflation', recent correction was one example of bonds reacting more to 'asset inflation'. Since 'yields' are step ahead of market they do tend to go down once market goes through a correction as one of the worries of bond market that of asset inflation is adequately addressed by this self adjusting security valve. We also than see flight to quality as market corrects, so far I would say it is not the Fed which is the biggest underwriter of this market it is this market mechanism that helps taper euphoria, thati s how I have been able to rationalise recent moves of bonds even after tame ECI and inflation numbers..fwiw take care..