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Strategies & Market Trends : Waiting for the big Kahuna
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To: William H Huebl who wrote ()2/22/2000 11:44:00 AM
From: sandeep  Read Replies (2) of 94695
 
What does Greenspan want ?
1) Low inflation
2) Sustainable rate of growth for the US economy.
What is he doing about it ?
1) Raise interest rates
2) Scare the market through talk.

By Fed's own admission (McDonough - NY Fed), the rate of growth of inflation ex-gasoline is slowing down. I think that some more time needs to be given to find out if the trend will continue.
Nobody knows what is the sustainable rate of growth for the US economy for the future. Looking back in the past and trying to determine that for the future could lead to a recession.
Raising interest rates to manipulate rate of growth is fine. However, the talk about stock market gains and the raises is affecting the companies which are already down more. The A/D line is continuously sinking. The chartists point to that as the reason for the stock market indices to go down. The overall market has gone down enough for most stockholders. The DOW is down 13% from the high. If this is too high, we can go down another 7% and be in a bear market by standard definitions. If we are going to adhere to old, standard notions of sustainable rate of growth, we need to adhere to the standard definitions of the bear market too.
So, is that what Greenspan want ? This talk to scare the market MUST stop. If he thinks it is necessary, he should raise the interest rates by a full point and let the chips fall where they may.
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