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Strategies & Market Trends : A.I.M Users Group Bulletin Board

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To: OldAIMGuy who wrote (8130)	8/10/1999 4:56:00 PM
From: JZGalt	Read Replies (4) of 18928

the IW is starting to come off its High Risk setting. That tends to happen when you wipe 20-30% off the mid cap NASDAQ issues and 10% or so off the NASDAQ 100. <grin> Interest rates are unfortunately the key here. Corporate bonds yields have expanded vs. govt. paper quite significantly. Oil prices are up and the dollar has quit rising against the yen and euro. Fed is stepping on the brakes too hard IMO. Mexico and Brazil and Asia barely got up off the carpet when they start tightening up the worlds money supply. No matter how irrational, the bond market controls the stock market right now. Only thing I see going right is Clinton and dems want to spend the surplus to buy back govt bonds on the open market and decrease govt interest payments overall vs. reps "giving it back to the people" campaign. Personally, I think the dems are right on this one. Shouldn't we be buying back that 15% paper issued in the 1980's and re-issue it as 6.25% paper even if you pay a hefty premium on the face value of the bond? The current republican solution to give back the "surplus" is silly and a transparent campaign item that will bite them in the ass if they don't watch it. Stimulating the economy, by giving a tax break when the Fed is on the edge of it's seat ready to raise interest rates (and mortgage payments and anything else indexed to the fed funds rate) is stupid. You are giving a few crumbs on one hand and getting the other hand whacked by higher costs linked to the fed funds rate. Marriage penalty fine. Estate tax elimination fine. Dropping interest rates of the lower brackets to help working poor fine, but the mess they came up with to spend the entire projected amount is just flat out silly. I don't want to be a gloomy person, but until the market focuses on post y2k earnings (15% on S&P???), I just don't see a significant rally until September when the money hits the 401ks of the world and the major players are back after their summer vacation. IMO, the market lacks conviction that things are going to turn out. Last year it was deflation scare and this year it was inflation scare. Just remember these are the same people making the prognostications. Duh! Stick with the infrastructure plays even if it hurts (ADCT below $40??) because no matter what happens, the wiring of America and the world is unlikely to be upset except by a major reversal in economic conditions. Soapbox Off.... Sorry I just had to vent. ---- Dave

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