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

To: sea_biscuit who wrote (72760)	3/19/2001 7:20:48 PM
From: Wayners	Respond to of 99985

Is deflation around the corner You get deflation from massive inventory build ups that just can't get moved without slashing prices dramatically. PPI was down but in order for there to be extreme deflation, you've got to see the PPI drop more like 8% to 10% or more year over year.

To: sea_biscuit who wrote (72760)	3/19/2001 11:10:59 PM
From: Doug	Respond to of 99985

Dipy: Currently there is no deflation threat. Deflation on a National level induces a debt deflation spiral. Debt has been incurred by individuals for the purchase of assets. As those assets loose value , the Debtor is faced with the equivalent of a margin call. That ripples thru from the Individual to the Bank to the derivative markets etc. The entire chain multiplies the loss many times over. It is therefore extremely dangerous. Deflation for short times can be healthy. The Telecom sector is a perfect example. Telephone rates have been coming down for some time. Unfortunately that deflation continued and has been an imp. factor for destabilising the Telecom and allied Semi-Conductor sector. The only one who benefits in a deflationary enviro is the Consumer with no hard assets, Those with lots of cash have a chance to pick up hard assets bargains if they can time the bottom.