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To: Bill Fischofer who wrote (9049)	1/30/2000 1:08:00 PM
From: Jill	Respond to of 17183

Great post--really insightful. Think I'll reproduce it over on our options thread just for good Sunday reading. Thanx! Jill

To: Bill Fischofer who wrote (9049)	1/30/2000 1:12:00 PM
From: JRI	Read Replies (2) \| Respond to of 17183

OT Bill, great post....funny, I was saying the same exact thing to a friend of mine re: "aid package" with oil prices between $ 25-30 last night at a party........however, using Venezuela as the example...Hugo Chavez (Venezuela's new leader), along with the Saudis, is essentially the glue to the current "discipline" that OPEC now has, although it will be interesting (again) once the Iraquis come on full-steam (bound to happen in the next few years)..Everytime oil get within a couple dollars of $ 30, Bill Richardson starts beating the drum (again)...It is clear that the U.S. is not going to allow oil to be above $ 30 for any extended period of time, but will accept oil in the $ 20-25 dollar range......and if Venezuela, Russia, Saudi Arabia are smart, they won't overplay their hand either... Current U.S. government statistics are woefully inadaquate to measure current productivity gains provided by this technology-driven expansion (broadband, internet, etc)....also, how does one possibly measure (the improvement in QUALITY of decisionmaking, better allocation of capital, etc.) that this revolution allows....It can't be done; Greenspan knows it. It is a qualitative decision for sure....but clearly something big is afoot... The beautiful thing about this is that we are only in the 2nd inning of a 9 inning ballgame...the internet is only being implemented on a negligible level overseas...The costs being ripped out of traditional business structures over the next few years will be truly mind-boggling...and both stockholders and consumers should be the beneficiaries (higher profits, lower prices) Combine this with the world's march towards unfettered capitalism and free-trade (albeit with fits and starts), but certainly at a pace unimaginable 15 years ago....and there is quite a powerful case for continued good news in equity markets..(note: I am not making the argument the "unfettered" capitalism is necessarily a good thing...only that it is good for equity markets)...I'm not even going to go into the huge boom in equity investing (primarily for retirement) which has many years to run, and is effecting all parts of the globe... Thanks for your continuing intelligent, well-written posts....Please join us more often!

To: Bill Fischofer who wrote (9049)	1/30/2000 10:44:00 PM
From: Gus	Respond to of 17183

Great line, Bill. lol Tobacco has no place in the PPI and should be corrected in the CPI by splitting the CPI into a CPI-s (for smokers) and a CPI-ns (for non-smokers).

To: Bill Fischofer who wrote (9049)	1/31/2000 5:40:00 AM
From: JDN	Read Replies (1) \| Respond to of 17183

Dear Bill: I must confess, I am still a smoker. Wish I werent but its my only bad habit. Tobacco prices are up due to Clintons TAX INCREASE on cigarettes (I know its not called that but that in effect is what it is). Manufacturers are seeing none of that so its really inefficient. Dont know why it should even be in the PPI anymore as so many people have stopped smoking altogether. JDN

To: Bill Fischofer who wrote (9049)	1/31/2000 8:44:00 AM
From: GVTucker	Read Replies (2) \| Respond to of 17183

Bill, RE: If one examines the various statistics that CNBC and others fret about, the root "inflationary pressures" are twofold: Oil and Tobacco. I guess I'd have to disagree with your premise that a lot of the 'inflation' that is out there is illusory. I guess I am in the complete opposite camp. There has been a huge shift in the investment patterns of most companies and venture capitalists over the past 2 or 3 years, resulting in an overweight in companies with little infrastructure requirements (e.g. the dot.com world) and underweight in commodity based industries. Critical industries are now capacity constrained that will cause core inflation to continue above most people's expectations over the next couple of years. First, look at crude oil: The OPEC discipline would mean nothing if the domestic exploration and production industry hadn't cut way back on its own capacity over the past two years. Thus, when OPEC cut back, there was nobody to make up the slack as has been the case over the 90's. This imbalance still exists and thus, no matter what OPEC decides in March, my guess is that crude prices (and, derivatively, natural gas prices) will average much higher than expected prices this year. Next, prices of many other important industrial commodities have increased sharply over the past year, and this will soon be reflected in the CPI. The price of aluminum has doubled. The price of nickel has doubled. The prices of various paper commodities is increasing sharply. In fact, this past year, for the first time in recorded history, the capacity of the paper industry declined. Planned capacity increases in the paper industry will barely budge over the next 3 years. There is just no one investing money in this capacity. And when somebody buys a computer, it's got to be in a box, remember. And, unlike others contentions that this capacity isn't needed, I would point to the prices of these various commodities that are increasing. If this capacity truly wasn't needed, the prices would either be unchanged or be moving down.

To: Bill Fischofer who wrote (9049)	1/31/2000 10:52:00 AM
From: Fred Levine	Respond to of 17183

Bill-- My view of inflation is somewhat different. It seems to me that the rules have changed, with prices determined by the category-killers and the mass mechandisers. Eg, in a recent New Yorker article about sweat shops, K-Mart ordered a million articles of clothing at their price and when the NY manufacturers couldn't make it, it was manufactured overseas. Multiply this by having the web as a business-to-business supplier, and immediately the need for efficiencies is compelling. For the vendors, the retailer is now the monopoly, and the consumer becomes the beneficiaries as inflation is controlled. I personally hope AG is aware of this because inflation in commodities may be true, but it is not percolating to the consumer. In fact, we are all consumers and this efficiency seem, IMO, to be an advertisement for free trade. Obviously, as dollars travel around the world, 3rd world labor will be more expensive. This, IMO, is also good. Not only for the people working, but for the development of more markets for more goods. In addition, I can't resist saying this, it makes war far less likely because war would interfere with vital commercial interests. I felt safer when Moscow had a McDonalds and Food Lion is selling Lukoil gasoline. fred