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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club
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To: marc ultra who wrote (7916)8/19/1999 9:23:00 PM
From: MrGreenJeans  Read Replies (1) of 15132
 
Marc

I agree a rally before or after the Fed meeting is possible but it may be becoming less likely any such rally will have legs

Such a rally may take us to new highs. If market participants believe it may be the last rate hike of the year and with strong 3rd quarter profits being forecasted the rally will begin in earnest. The key to any continuation of such a rally would be trends in the CIBRC, CPI, PPI, and unemployment reports.

weak dollar

The "weak" dollar has been overplayed in recent days. The U.S. economy is fundamentally very strong and in such an environment a "weak" dollar is temporary. A strong or weak dollar is handled by the free market over time. A truly weak dollar causes import prices to increase but at the same time it causes increases in the GDP as our products become more attractive to other countries as their currencies strengthen.

This weak dollar issue is going to tend to make the Fed willing to err on the tight side which is slowly increasing the very small chance of 50 basis points or a raise with a bias to tightening

I do not think the weak dollar is a major Federal Reserve concern. The focus is on GDP growth and wage price inflation. If the Federal Reserve raises interest rates on Tuesday they will most probably maintain a neutral bias and if they do not raise rates on Tuesday I would expect the Federal Reserve to change to a tightening bias to keep market participants alert that the Federal Reserve has a watchful eye over future events.

China which unfortunately is back on the radar screen

I think the China focus should be on any devaluation of their currency which may or may not cause Asia crisis, part II.

Any comments?

Bob was very confident and bullish and willing to call multiple gift horse opportunities. This is very far from the way he's been talking lately with talk of possible inflection points

Just like with the Federal Reserve don't pay attention to what Bob says pay attention to what Bob does. Bob still recommends a 100% position and dollar cost averaging into the market at this time. I can only conclude he still thinks the risk / reward ratio while worsening is still favorable to the upside at this point in time otherwise he would be selling fully or partially.

As for me, (Happy let me drop my GreenJeans for ya), I am at 80% equities and 20% bonds / cash with 10% out of the 80% a trading position in the semiconductor equipment market-AMAT-which I am still fully invested in. In the event of a sell signal I will sell in a New York minute but probably maintain my holdings in Vodafone / Airtouch hedging them with puts.
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