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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (74927)	1/31/2000 2:22:00 PM
From: Knighty Tin	Read Replies (3) \| Respond to of 132070

Chris, One problem is that there are more than 500 companies in the US. Profits for all public cos. were up about 3% last year, or, a bit more than the CPI and much less than Treasury Bond yields. Even the S&P 500, if unweighted, had a lousy year. The problem is that a few cos. have exceptional size and those are the ones who have been faking the eps numbers. As we saw with Lucent, Gateway and Compaq before them, this financial flim flam eventually starts to wear a bit and will some day totally blow up. I don't know when the IBMs have to pay for their accounting sins. I just know I don't want to be there when it happens. So, look at it this way for a different picture: 1. Interest rates are rising as fast as they ever have in history, albeit from an abnormally low level. 2. The GDP Deflator is showing signs of inflation. 3. The partially inverted yield curve is saying inflation. 4. The CPI and co. pricing power is saying deflation. 5. Profits are up less than what zero credit risk bonds yield. 6. The strong dollar has supported non-Japanese US investment until now. But the Japanese are still the main enabler lenders of our folly and they got creamed on US fixed income investments last year. 7. Greenspan has flooded the world with dollars and there will be payback for that stupidity at some point. I am still looking at worldwide deflation as more probable than inflation, but the inflation case is certainly getting stronger. Perhaps Stagflation is likely.