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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: MikeM54321 who wrote (5156)	7/11/1998 10:05:00 PM
From: don pagach	Read Replies (1) \| Respond to of 9980

MikeM, Good to see you back on the thread! Your article made me remember a conference I was at in Feb. in which the featured speaker was the CFO of Wachovia, who predict4ed that by year-end we would have an inverted yield curve, he also stated that that the CPI overstated inflation by 2% (except for ATM fees, :)} However what I wonder about is the articles conclusion that low interest rates are great for the stock market, look at Japan, 1% on the long bond. When is demand in the US going to tail off?? Lee posted an article about the huge increase in US auto demand, but really how long can this last... I mean we see the slow down in personal computers, autos will be soon given the disfunction in the market due to GM. I wonder what is happening to to sales of consumer durables (don't mean for you to do my research), but hey isn't personal spending going to slow down at some point and then earnings?? I have been in cash for awhile so am getting a little frustrated (UGH, if I had just bought YAHOO on margin...) so please everyone stop spending...

To: MikeM54321 who wrote (5156)	7/12/1998 12:09:00 PM
From: Joseph G.	Read Replies (2) \| Respond to of 9980

<<In the 1960s, yields on long-dated governments routinely were in the 4 percent zone, while in the 1950s, they returned 3 percent or even less! These are relevant comparisons because one of the fundamentals that determine long-term rates, inflation, is as low today as it was in the 1960s and 1950s. In the past, bond buyers were satisfied with a yield some 3 percentage points over the rate of inflation.>> This is a very good example of UNinformed journalism there is so much around these days. The truth is that in the 1950's and 60's, as was the case since the 1930's, Treasury set the rates, not the market. They could do this because most Treasury debt was in savings bonds and total Treasury debt was only a small fraction of GDP. Only in the 1970's, when inflation shot up, the Fed + Treasury changed the policy.