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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 670.92+0.1%Nov 7 4:00 PM EST
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To: Rarebird who wrote (36363)1/1/2000 1:17:00 PM
From: bearshark  Read Replies (2) of 99985
 
Rarebird:

Here is one possibility. Take a look at the Fed Funds rates at the end of 1979 and then into mid 1980.

economagic.com

Volcker tried to deal with inflation early in 1980 and then let up near the election. Of course, nothing could save the peanutman. Then after the election, Volcker was forced to go for inflation's jugular. He almost killed the economy.

The FOMC may do something similar. They may think they can slow the economy with a slow climb in interest rates. A couple of things may happen. They may up rates again in two more quarter point efforts and realize that the economy has continued unabated. Then they have to move more forcefully. They may also do a repeat of 1980 and 1981. They may think they have slowed things and let up too early and then have to reinstate even higher rates.

The February meeting will be interesting. Will they try to nudge rates up by 25 basis points? Will they try to make a statement with a 50 basis point move? Will that be enough? Can they manage the stock markets through rate maneuvers and slow the economy as they would like? Is it a raging economy or was it Y2K inventory growth? This will cover only the next 6 weeks. Then there are a number of other things that may happen. This should be interesting and present opportunity.
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