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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01

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To: Bucky Katt who wrote (6129)	5/16/2000 6:58:00 PM
From: Joe Smith	Read Replies (2) of 13094

It seems to me that we are looking at a long-term change in the movement of equity with this much higher cost of money. With rates this high, there is much more incentive to move money from cash waiting on the sidelines into paying off debt. No more taking out home equity loans and dumping the money into CSCO or JAGTX. Instead, we'll be paying off anything with a variable rate and we won't be looking to borrow. Very good long-term, but short term, there is less equity to enter the markets. Also, the lending rates are going to take a bigger bite out of the average person's nut, leaving less for investment. Finally, this will slow down the economy and therefore earnings growth and revenue growth. Although interest rates are of little interest directly to the average high flying tech stock, they do have major macroeconomic effect. If they didn't, AG wouldn't be using them as a tool ( a rather blunt tool if you ask me) These hikes are having an effect, and that effect will grow. Typically, the result is seen in six months. So the bottom of the "soft landing" should be about 6 months from now (right around election time) Pumping so much money into the economy in Q4 of 99 is going to be a major hangover. Are the hikes having an effect? Ask yourself and anyone you know if the rate of growth of their equity has slowed or even reversed. The lucky ones have seen the growth slow. Many have lost much or all of what they made between October and March. Let's just hope AG doesn't overdo it. IMHO .5 was unnecessary. The economy is slowing. It just has a lot of forward momentum. I guess he can always lower rates again if he sees a threat of recession.

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