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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 660.19

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Nov 18 4:00 PM EST

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To: Les H who wrote (35832)	12/23/1999 10:22:00 AM
From: bearshark	Read Replies (1) of 99985

Les: This was the point I was making last weekend. Although the FED increased rates in 1980, it tried to manage rates in a relatively mild manner. In 1980, they moved too quickly (although some would say this was caused by the 1980 election) to lower rates and inflation roared right back in 1981. So they were forced to adopt killer rates that reached about 20 percent. (From memory.) If the 5.7 percent growth rate reported yesterday is indicative of real growth and not Y2K inventory buildup, the economy may be getting away from the Fed this time. The FOMC has either been fortunate or very good in their rate moves so far. If they have been fortunate, and the economy is unstoppable with tweaking, the FOMC may find itself in the same situation as it did in 1981. Instead of inflation, it will be a roaring economy that may initiate inflation. I too feel that they need to make a dramatic statement in February if the economy is as strong as it looks. We just have to wait and see.

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