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Deflation may be the problem; what's happening to these commodities?
Everything is down, major commodity indices are at multi-year lows. These
low crude prices will lead to another boom-and-bust cycle for the land
producers in the oil belt, prices can't keep going down at this rate, or
so I think. Of course if China devalues, then it's another round of
Asian devaluations, not good.
dave
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-----Original Message-----
From: John Stevenson <johnstev@xxxxxxxxxxxxxxxxxxx>
To: realtraders@xxxxxxxxxxxxxx <realtraders@xxxxxxxxxxxxxx>
Cc: John Stevenson <johnstev@xxxxxxxxxx>
Date: Wednesday, June 10, 1998 2:05 PM
Subject: MKT - The "Big Picture"
>I refer to the Jerry Favors analysis as stated last friday (5 June) on
>CNBC. I think I heard him say that the mkt needed a week of big volume, and
>needed to set new highs above the mid-May intraday high of 9312 or else. .
>.that mid-May high would represent the "final top" of the astounding Bull
>mkt we've witnessed for the past 2-3 years, and that a plunge would occur
>within 107 +/- 5 calendar days from that top. I think it's safe to say that
>the rally isn't happening.
>
>I think it's high time that ALL investors pull their noses out of their
>charts for a time, and take a REAL GOOD look at some fundamental questions:
>
>1. Do you believe in the so-called "New Paradigm"?
>(If you do I think you're probably beyond help at this point, but how can
>you justify a New Paradigm, and engage in technical anaysis based on models
>generated from the "Old Paradigm(s)"?)
>
>2. What happens, based on historical empiricism, when prices rise, and
>earnings fall?
>
>3. If the "fundamentals" of the Economy can be reduced to "a low rate of
>inflation" (as Bulls want us to believe), what about the other
>"fundamentals" that tell a radically different story? (ie: balance of
>trade, mkt internals, shrinking profits, chaos in foreign mkts, blazing GDP
>growth. . .etc.)
>
>4. Does laying off 1000's of workers really constitute an "increase in
>productivity", or merely a short term boost to the bottom line (and the
>stock price), to be inevitably followed at some indeterminate time by an
>erosion of product and/or service quality? Is erosion of quality deferred
>inflation?
>
>5. Do the PPI and CPI really measure inflation (defining same as: an
>erosion of purchasing power due to an expansion of the money supply), or
>have they become easily manipulated tickets to popularity for politicians,
>and sales tools for Mutual Funds?
>
>I would like to stimulate some discussion of these potentially
>earth-shaking matters in lieu of the usual formulae tweaking comments that
>are of interest in the micro arena, but may lead to tunnel vision in the
>macro arena.
>
>Anyone care to wade in. . .?
>
>A scientist un-accustomed to seeing Natural Law (if same is present in Mkts
>at all) re-written by ravingly optimistic ad copy. . .
>
>John D.Stevenson
>
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