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

To: HairBall who wrote (14358)	5/19/1999 1:34:00 PM
From: StockOperator	Read Replies (3) \| Respond to of 99985

LG, If you get a chance read my last post to heinz. In it I refer to the long term chart for the 30yr. I pointed out that the market has had a difficult time every time it reaches this upper resistance line that started in 87. Well we are almost there right now. To get back to the BK post, a quick look at the chart will show you that during the past 12 yrs there have been many inflation scares along the way. But in the context of the big picture, the overall pattern on rates has been declining during this time. Of course we have had the normal peaks in valleys that are present on all charts. But nevertheless rates are falling. And when you consider what impact the internet may have on competitiveness and pricing,,,who knows? Personally, we may just be in a long term period of lower inflation - deflation may not be completely accurate. Besides companies like Deere and Fruit of the loom have been pushing more of their workload off shore for many years now. It is hard to argue with $.50 hr wages. Just some thoughts. Regards, SO

To: HairBall who wrote (14358)	5/19/1999 2:07:00 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 99985

LG, re: BK thread post. first let me say that there is 'good' deflation and 'bad' deflation. deflation that results from more competitiveness because of free trade,higher productivity because of technological progress,etc. is 'good' deflation. this is because it benefits the consumer,i.e. us, and spawns even more innovation and progress. 'bad' deflation is the one that results from massive industrial overcapacities, lack of demand and a solvency crisis that makes debtors unable to repay their debts, thus threatening the viability of the banking system and creating a credit crunch. this is what Japan is currently experiencing. there is a simple way to find out whether 'bad' deflation is threatening the system: just watch how the stock market reacts to economic data, like for instance the employment report. if the market reacts positively to a 'weak' report, it is scared of inflation. conversely, if a 'strong' report elicits a positive reaction, either zero inflation or actual deflation can be assumed to reign. at the moment 'weak' reports are greeted positively by the market, therefore no deflation threat currently exists. regards, hb