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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: KM who wrote (38640)	1/30/2000 7:15:00 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 99985

Truff, I love those companies who are loosing head over fist and are priced more than the Belgian and/or Austrian GDP combined. $1.3 million losses per day ($117 million per quarter) is nothing between friends, gee we make it back by writing put option on our stock. Haim

To: KM who wrote (38640)	1/30/2000 7:28:00 PM
From: KM	Respond to of 99985

Fed Commentary Kudlow: One Fed Guy Gets it Right by Lawrence Kudlow Chief Economist, CNBC.com While one regional Federal Reserve bank president struck fear in the hearts of stock investors, another's encouraging words were largely ignored. CNBC.com Chief Economist Lawrence Kudlow explains. The morning after Monday's sharp stock market sell-off, a number of press accounts cited a speech given by Atlanta Fed president Jack Guynn. According to these accounts, the speech crossed the wire at 1:39 p.m. Within minutes the market plunged. What did Mr. Guynn say? Nothing particularly interesting. Usual Phillips curve-type stuff. No big-scale evidence that the economy is yet slowing. The inference being that the Fed would have to raise rates again. Heaven forbid, somebody out there is working and, oh-my-gosh, spending. Yada, yada, yada. Same old, same old. What interests me about this story is the dog that didn't bark. Namely, Dallas Fed president Robert McTeer gave a speech at almost the same time. But no one seemed to pay much attention. Too bad. It was an optimistic speech. He told a group that beginning in 1996, the economy moved into a higher gear, driven mainly by an acceleration in productivity growth and faster labor force growth. He asked rhetorically: "Is it possible to sustain productivity growth above 2 ½ percent, and output growth at 4 percent, without driving inflation above its present rate?" "Let me answer you this way: We've been doing it for four years now. As Yogi Berra is alleged to have said: You can observe a lot just by watching." Later on in his speech Mr. McTeer argued that high technology has been driving productivity. And much of the new technology-driven production is disinflationary, not inflationary. Especially the Internet, and almost everything associated with it. The Dallas Fed president concluded his talk with this: "Add to technology and globalization, deregulation in most of the world, and privatization, and the replacement of the heavy hand of government with Adam Smith's invisible hand of the marketplace, and you've got what I would call a new paradigm." Clear-eyed optimism from Robert McTeer is nothing new. In the Dallas bank's 1998 annual report he predicted 3- to 4-percent economic growth with inflation remaining below 2 percent in 1999. Right on the money. And get this. "I'm not saying that inflation will remain low despite strong real growth; I'm saying it will remain low in part because (italics mine) of strong real growth. If inflation results from too much money chasing too few goods, more goods will help as much as slower money growth." And there's more. "I don't believe in speed limits on the economy or a stable NAIRU (non-accelerating inflation rate of unemployment, not the folks that used to run India). And I'm certainly not a Phillips curver who believes inflation and unemployment are on a seesaw where one goes down only when the other goes up." In my view there is no one in the Federal Reserve system today who so clearly understands the monetary causes of inflation, the economic benefits of the Internet economy and the crucial interaction of the two. In earlier bank reports, Mr. McTeer and his fine staff have highlighted the economic growth benefits of Schumpeterian gales of creative destruction ("The Churn: The Paradox of Progress," 1992); the optimism that living standards continue to rise ("These Are The Good Old Days," 1993); a defense of the service economy ("The Service Sector: Give It Some Respect," 1994); and a positive view that our dynamic economy still offers plenty of opportunity for individuals to move up ("By Our Own Bootstraps," 1995). Piloted by senior economist Michael Cox and his colleague Richard Alm, these studies are must-reads for anyone interested in the new information economy. So is the recent Cox and Alm book entitled "The Myth of Rich and Poor." Meaning no disrespect to the Atlanta Fed's Mr. Guynn and his potential market-moving statements, but I sure wish all investors and our numerous presidential candidates would give the Dallas Fed's Mr. McTeer a fair hearing and a close reading. Rumor has long had it that Alan Greenspan spends a lot of time reading in the bathtub, presumably to rest his back and sharpen his mind. I've done plenty of that myself. And learned that the ideas coming out of Dallas are completely waterproof.