CD, the Fed easing was a message to the market that they know it is getting bad right now. It was not meant to right the markets but to ease money supply going into 2001.
Credit markets have gotten tight, and that restricts economic activity. The access to capital is the lifeblood of industry. Fed cuts take 6-months or more to take hold and make a difference, so expediency is of paramount importance when sighting a slowdown.
The markets are going down because nobody knows how bad the economy is getting, or how bad it's become, or the effect over the next several quarters on the economy and the stock market. The continual deflating bubble also contributes to the malaise in the market. That's good. It's needed.
That uncertainty will prevail until we get a clearer picture through statistics released this month and next month.
By the way, I wholesale and distribute product, and local trucking companies we talk to are saying people say the economy is slowing, but we're not seeing any signs of it.
That's in the Midwest, however, and my area is strong in office furniture, automotive components, and grocery distribution. Furniture is a lagging economic indicator, and the automotive is a more immediate indicator.
Autos are slowing to a trickle, but buildings that need furniture were planned when the economy was roaring.
Bottom line - business sucks right now, but nobody really knows how bad, and that brings market uncertainty. |
