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Strategies & Market Trends : Three Amigos Stock Thread

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To: James Strauss who wrote (15961)	6/24/1999 9:46:00 AM
From: j g cordes	Read Replies (2) of 29382

James.. wrong, I've been through three rate cycles as a consumer. Every one sparked the consumer to shop more. The most pronounced was the real estate bubble in the 80's when the threat of increasing rates pushed people to buy now instead of losing a point or two, then another point or two, and again... on their mortgage. If there's a threat in the air that mortgages by next year might go to 11%-12% you know that business would boom now to take advantage of current rates. That boom in housing sales would then be interpreted as a reason to raise rates further. The cycle ends by choking off business across too many sectors resulting in a recession. There're many other specifics that come to mind.. the cost of cars, all big ticket items carry significant interest burdens that are amplified over time by as little as a 1/2 point. If the threat ever appears real that rates will go up, you'll see stampede buying which will simply confirm what the Fed itself causes. Rates never "put a lid on prices.." they raise the cost of doing business.

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