You could very well be right. It could happen that way.
I haven't been investing/trading as long as you have, but I was watching very closely in October 1998. Then, the market breathed a huge sigh of relief when the Fed acted, and said "here comes the cavalry to our rescue. They will fix it right now."
This time, I don't think the Fed will be lowering rates until they are 100% sure that the inflation genie has been stuffed back in her bottle, and they are worried that the economy is slowing too much. Today, the problem is precisely the opposite (inflation risk, too-hot economy). Therefore, I think it's going to be a long time (2001 at the earliest, more likely 2002) before any Fed rate cuts happen. Of course, a crisis like the east Asia or Russia defaults/liquidity crisis would change that fast.
So, I'm guessing that the market begins rallying in anticipation of an end to rate hikes, which I expect sometime this year. But, certainly, I could be totally wrong, and I am interested in other well-reasoned opinions. |
