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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 683.00

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Nov 11 4:00 PM EST

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To: KM who wrote (37231)	1/11/2000 10:54:00 PM
From: Les H	Read Replies (2) of 99985

The Broken Spigot...We have been commenting on the weekly Fed credit/money creation scorecard for some time now. The spigot is no longer on full blast. It's simply broken off of the pipe and the high pressure stream is flowing completely unchecked. The bulls would have you believe all of the Fed credit and money creation over the last few months was in prep for Y2K. Now that Y2K has proven to be the ultimate non-event (at least for now), why hasn't the high pressure monetary pipe been capped? (Forget trying to take back or sop up the excess liquidity.) Witness last week's $18.1 billion increase in Fed credit. Another $6.6 billion in additional currency. The two week St. Louis Fed reading on the adjusted monetary base is an increase of $16 billion - a 2.7% increase in the total monetary base in just two weeks. Clearly this is about something other than Y2K. You guessed it, time for another another happy ContraryInvestor readers choice questionnaire. Al and friends are feverishly printing money because: 1. The leveraged speculating community has increased its daily dosage of methamphetimine margin debt and needs a new "supplier". 2. Someone or a few someone's are being bailed out. 3. Gore is behind in the polls. 4. "It's just like eating peanuts. Once you start, it's hard to stop." (Actual Greenspan quote upon being re-anointed supreme leader. Thank you Bill Fleckenstein.) 5. The financial system is careening out of control and increased credit is the only thing that will keep it from crashing immediately (while "they" try to come up with plan B). It could be any or all of the above. Greenspan's recent "early" re-uping with the Clinton Administration is a clear sign to us that the Greenspan agenda is quite politically sensitive. If the money keeps flowing, the wildest part of this market finale may lie ahead of us. At worst, the Clinton-Greenspan "team" has zero tolerance for a significant market setback or a recession. (The new 2000's version of the "zero tolerance" law, in case you were wondering.) It's just simply comforting to know that our fearless political leaders still have the backbone to insure the integrity of the US market mechanism and financial system. In many other countries, it's nothing more than a rigged game. Simply comforting. contraryinvestor.com A lot of other interesting items in the above article including comparing market volatility with past, market cap and returns, etc.

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