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Politics : Ask Michael Burke
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To: valueminded who wrote (70639)11/17/1999 2:06:00 PM
From: Earlie  Read Replies (2) of 132070
 
Chris:

Your interest rate commentary is right on the money and I sure agree with your point of view with respect to "Easy Al'. None of us have ever seen the taps open like this before.

As you note, the markets are responding as one would expect to his two-faced approach to the situation. I can't say as I blame the market. Looks like market participants expect him to keep the pot boiling until he retires next Spring. "Let the next watch deal with the icebergs,....I'll be safe ashore" (g)

I do see a couple of things that could wreck the ship in spite of anything the Fed does. (a) The U.S. dollar is in serious trouble, courtesy of the current account/trade deficits and money flows are now more inclined to flow to Europe rather than the U.S. Interest rates must be nudged higher (either by the Fed or by the bond Vigilantes) to keep U.S. treasury selling from becoming a rout. Europe nudged rates a week ago, and at a minimum, the former rate differential must be maintained. In spite of his "neutral stance" (what a joke), Sir Alan will be back very soon to plug the gap,....probably right after the Y2K worries subside. (b) The tech sector silliness is in for a cold shower this Spring. The amount of money that has been foolishly dumped into the nifty-fifty frightens me silly . Once the wiser types commence an exit, we may find few buyers at these rarefied heights. Recall that there are few shorts left to slow any panic-induced slide.

I'm not looking forward to the Spring.

Best, Earlie
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