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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: marc ultra who wrote (6433)6/30/1999 9:36:00 PM
From: MrGreenJeans  Read Replies (2) of 15132
 
Federal Reserve

While the money supply has been downplayed a lot by the Fed and others in recent years it is obvious that Bob puts a lot of importance in it.

The Federal Reserve has only downplayed the importance of the money supply in targeting interest rate levels relative to the Paul Volcker days. The Fed never downplays the importance of money supply or velocity. Bob places a lot of importance on the money supply because it is the excess money that finds its way into equity markets creating large moves.

We look at a Fed that has been clamping down on money supply growth (if not even actual money supply) and has just raised interest rates

In order for the Fed to raise rates the money supply must decrease.

My guess at this point is that Bob does not issue a sell shortly. A slight increase in rates, a change for the better in bias perhaps indicating no interest rates move in the next few months although Greenspan can change rates b/w meetings if he wishes all means the bull continues for at least the next few weeks absent bad economic news. I suspect Bob will hold on to the bull argument in the weeks ahead.
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