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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Terry D who wrote (7521)	11/10/1997 11:37:00 AM
From: Sam Citron	Respond to of 18056

TD, "Is the Fed protecting the economy from the real posssibility of a deflationary slowdown or the financial markets? And is there anything inherently wrong with the latter? Deflation would generally cause lower profits except for import sector, which is the putative source of such pressure. (Take a look at PIR chart). Fed job is to lean against prevailing wind. For now, deflationary pressure from abroad offsets inflationary pressure from strong US economy. Goods becoming cheaper. Services more expensive. If (when) US economy cools, then Fed will worry about deflation. They are not dusting off Keynes' General Theory just yet, but it's up there on the bookshelf. What Fed may have tougher time grappling with are the implications of Moore's law and Metcalfe's law which are inherently deflationary, especially as more of household budget is devoted to information goods and services than ever before. SC

To: Terry D who wrote (7521)	11/10/1997 11:41:00 AM
From: Cynic 2005	Respond to of 18056

TD, welcome back! <<1. Your thread is booming I see. Congrats.>> Every dog has it's day. I guess it is my turn. -g- I would rather see my accounts boom at the same rate as the number of posts on this thread. -g- I normally don't regret many of my moves. But I regret for backing off my decision to follow your lead on AMAT from 60 to 100, pre-split. After all, I did call the company to check things out and didn't pull the trigger on the long side. Reg. Feds, I think it is impossible for the feds to isolate the real economy and the "bubble" economy tied to the speculation in the market. If their policy addresses an evil (deflation) in the economy by cutting rates, they will feed a deamon in the stock market which will lead to a much more catostrophic fall at a later stage. The reason for not rising the rates, of course, is obvious. The inflationary forces can be assumed to be in check due to current global business climate. I will fall short of calling it a gamble, a caliculated risk - may be. As AG said earlier this year, they expect the bond market to tell what to do next. It is too early to tell if the bonds are telling us that if there is a recession on the horizon. But, it sure is telling the Feds to stay put. IMHO. I think the Feds will keep watching the credit markets for future course of action - more now than ever. -Mohan (typed at 11:10, See how long it takes to get posted by our system. -g-) "In the views of the economists, the real world is often a special case." -Unknown!