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To: Lee who wrote (107170)	3/4/1999 3:36:00 PM
From: edamo	Respond to of 176387

lee...re"bond yields..." good point... everything is relative, depends on the vantage point...currency the same way...traders cringed with the yen @ 150...end of the world...but didn't japan prosper twenty years ago with yen @ 280... a reason will always be found to move markets...it's the nature of the beast..., thanks ed a.

To: Lee who wrote (107170)	3/4/1999 3:53:00 PM
From: JRI	Read Replies (2) \| Respond to of 176387

Lee, while I agree with your historical example (I remember it well)...It is my opinion that if rates were to go lower, say in the range of 5.25-5.50, investors would feel more comfortable with stocks (even if they believe they are overvalued) due to the Greenspan/Fed model...1/30yr. treasury, etc...that many have been cocktail-napkining over the past couple years... Also, as a pure liquidity argument, in April, (and maybe sooner) I am predicting that a lot of money will be arriving for the stock/bond markets Japanese...There is a lot of cash on the sideline..it will be hard for it to sit there forever (end of quarter, dressing up stock portfolios..one example) I totally agree with you that we have needed also to catch to earnings....but, it looks like earnings are certainly going to be better this year than last (I'm hearing 7-8% for S&P) Do would you consider a significant slowdown? What if we are growing at 3-3.5% 6 mos. from now...? I would consider that a slowdown, and, I think the bond market would too.. I think the market still doesnt understand that we can grow faster nowsdays (absent inflation) due to technology vs. smokestack (and other factors)....I don't know if the market fully understands this....It wasn't long ago that breaking 6% unemployment meant that we were doomed to higher inflation (no longer true..) <The current yield is not out-of-line with recent numbers> I thought that recent numbers were Federal gvt. reports that indicated strong demand (producers, employment) but did not directly point to an actual increase in inflation (that the bond market is assuming inflation 6 months out...but this is not a given)....Do you believe that a 5.70% 30 year is justified, if inflation is running at 1.5%-2.0% and holding? (I thought the Fed was modeling for inflation at 2.5%). I think you would agree with me that a 5.70% 30 year...with 1.5-2.0% inflation...representing a historically (very?) high real rate.. Lee, you know I greatly respect your knowledge in this area. I look forward to your answers...