Miracle and mirage in US productivity

Article Abstract:

US labor productivity rose by 4.9% annualized in 1st qtr 1999, while average growth has been 1.3% since 1973. This could help stock prices by keeping inflation low and reducing the equity risk premium, while boosting economic growth, which helps profits. Technical progress, the more rapid diffusion of new technology, investment growth, and the impact of the internet may all help to boost productivity. Wages may rise, and benefits from new technology may be soon exhausted, so increased productivity may not help equities over the longer term.

Production (Economics)

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Footsie's fair value mystery

Article Abstract:

There is no clear answer as to whether the FTSE-100 is overvalued, and this helps explain volatility of stock prices. Equity prices relate to expectations of dividends, with a premium relating to the uncertainty attached to dividends, or the equity risk premium. Market expectations cannot be precisely measured, so the equity risk premium cannot easily be ascertained. Small changes to dividend expectations and the risk premium can have a major impact on estimates of the fair value of stocks.

Financial Times Stock Exchange 100 Index (Index)

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In the month of June, whistling for the moon

Article Abstract:

The stock market tends to perform poorly in June each year. Price falls of over 5% may occur, as is also the case for May and Sep. Share prices may rise initially in June only to fall later in the month. Bulls runs in the last half of the 20th century amount to 16, nine of which have ended from May to July, and twelve ending between May and Oct. There is no certainty as to when the 1996 bull run will end, but history indicates that it may not be long after May 1996.

Securities industry

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