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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (1222)	2/24/2001 6:25:13 PM
From: Elsewhere	Read Replies (1) \| Respond to of 24758

fair value means the DOW must fall at least 2/17 of where it is now. Ok, but this is a much smaller risk than the NASDAQ situation. One year patience, and the denominator of the PE has caught up. M2 is growing and has grown for 6 years at 12%. According to Merrill Lynch ("The Chartbook" by Bruce Steinberg as of Feb. 23) M2 growth is currently 7.4% (ML source: Federal Reserve Board). international.askmerrill.com where can this extra money go, since it is neither slowing nor decelerating? What about the current account deficit? For 2000 a deficit of $435 billion is projected (Bureau of Economic Analysis). Dollarizing the world economy. The answer is it will go by non-negotiable demand into compensation, compensation way in excess of output even at declining utilization. Yes, unit labor costs rose 4.1% in Q4/00 but unemployment hit a two-year high of 4.2% in January (Bureau of Labor Statistics). Additionally consumer confidence has dropped a lot, from >110 to <90 (University of Michigan). Raw material prices won't increase in a decelerating global economy (world GDP from 4.1% in 2000 to presumably 2.5% in 2001). Capacity utilization is at 78%, close to the 1991 recession bottom of 77%. These are no ingredients for inflation above 2.5%.