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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 678.87

-0.3%

Dec 16 4:00 PM EST

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To: James Strauss who wrote (42116)	3/3/2000 10:41:00 PM
From: Dwight E. Karlsen	Read Replies (1) of 99985

Jim, re >Weaker employment figures hints at the FED rates beginning to take effect... Perhaps we only get one or two more rate hikes instead of three or four... The market is sensing this... Imagine what would happen if the FED takes no action at the next meeting... : ><< The fed does look at the employment data, but that is just one indicator of potential future inflation. The fed is not "targeting" the unemployment rate, nor the # of new jobs created rate. Neither is the fed targeting the stock market, but Alan Greenspan clearly stated that the main reason the FOMC will have to keep raising rates is because of the "wealth effect" indicator; i.e. he clearly stated that although the FOMC is not targeting the stock market, nor saying where stocks should be valued; but that the simple fact that stocks have gone up is an indicator of wealth effect inflation. Unfortunately, the momo players who have thrown every yardstick out the window except to buy what's going up will force A.G. to keep incrementally moving interest rates up..and up...and up. Until the stock market stops going up. Everyone with an Adjustable Rate Mortgage is going to be continuing to take big hits on their monthly disposable income, and home buyers will not feel much like buying. Oh, and of course all those old-economy companies with debt will have to trim back their purchases from the dot-com companies. Not to worry though, Jim! Because earnings don't matter anyway. Neither do interest rates. Now say it 500 times for me: "The only thing that matters is that everyone else is just as big a fool as me."

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