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Politics : Ask Michael Burke
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To: Freedom Fighter who wrote (66779)8/25/1999 6:22:00 PM
From: valueminded  Read Replies (1) of 132070
 
Wayne:

Heres my 2c. The amount of money going into the US market has already slowed. The fact that the market has risen substantially yet more stocks are down than up seems to be testiment to the fact (at least to me) The market is focusing on a narrow set of winners mostly within the technology sector.
The driver of liquidity in our market is the Japanese getting better returns on their savings and our credit expansion. Japan has no more room for liquidity expansion as their interest rate has been zero since last year. Our liquidity will decrease due to interest rate hike.
The FED increased rates to turn the tide on the decline in the dollar ("inflation" is a convenient alibi). Higher rates will be required to keep the dollar from declining with our trade deficit as the rest of the world recovers. Consumption will slow and credit growth will slow. Japan will retain more capital as the dollar decreases in value and their US investments return less than investments at home. The market having lost its major capital infeeds will suffer a major liquidity issue and decline substantially. I hope this occurs sooner than later as I expect the consequences for the economy to be ugly. As far as timing, I dont expect this to occur Until after the new year. all this imo
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