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

To: Knighty Tin who wrote (41148)	12/28/1998 1:21:00 PM
From: Joss	Read Replies (2) \| Respond to of 132070

Hi Mike, Been watching YHOO this AM....up another 34 points! There must be a limit to this kind of action but I just haven't seen it. It seems to be a wonderful game of burn the shorts. Thoughts on when gravity will rear its ugly head? Steve

To: Knighty Tin who wrote (41148)	12/28/1998 1:34:00 PM
From: Jess Beltz	Read Replies (4) \| Respond to of 132070

Michael, I agree that asset prices are "inflated" relative to historical standards. About the hypothesis that the Fed or other government agencies is rigging the numbers to create the illusion that inflation is low when in fact it is higher than reported only has substance if (1) the true numbers are really substantially higher than those given, and (2) the market reacts to the true numbers. I am not sure that either of those things is happening right now, nor will in the near future. The arguments about the correct formulae for the CPI and PPI have been around for a long time without resolution. To me, the key right now for maintaining the low inflation "regime" (and the impact of that on inflated asset prices) has to do with the cost of energy. Without a rise in energy prices, I see (a) inflation dead in the water, and (b) overall asset prices at levels comparable to those existing right now. I still see the sector rotation out of blue-chips in the next two fiscal quarters, and the best tech stocks stand to be the recipients of that rotation. There is no hint of rising energy prices on the horizon. The Fed will only start pulling in the reigns on s-t rates when Alan catches a whiff of inflation. I don't see that coming until (1) the recovery in Asia stimulates an increase in the demand for oil, which (2) translates into higher energy prices. jess.