Fed ineffectual so far...

Enrique Diaz-Alvarez enrique at anise.ee.cornell.edu
Wed Mar 22 09:37:17 PST 2000

Doug Henwood wrote:

> Another negative: free cash flow for nonfinancial corporations
> (profits plus depreciation allowances less capital expenditures) has
> been pretty strongly negative for the last 2 years. This has been a
> pretty decent long-term leading indicator for the stock market,
> though of course Jordan says everything is still ok.

Jordan and I discussed this on LBO a while back. Free cash flow is key because it reflects the *current* ability of businesses to put cash in shareholders pockets. And things are actually worse than this, from the point of view of shareholders, because FCF does not account for cash burned by stock options. Jordan says options are not an expense -I say if it walks like a duck, talks like a duck...

> Doug

-- Enrique Diaz-Alvarez Office # (607) 255 5034 Electrical Engineering Home # (607) 272 4808 112 Phillips Hall Fax # (607) 255 4565 Cornell University mailto:enrique at ee.cornell.edu Ithaca, NY 14853 http://peta.ee.cornell.edu/~enrique

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