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Strategies & Market Trends : Market Direction Predictions and BS guesses
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To: the Chief who wrote (112)5/27/2000 9:36:00 AM
From: New Economy  Read Replies (1) of 234
 
I hate this fixation the media has on the Fed. Look back in 1994 when the Fed kept raising rates. Finally the market turned around in Fall '94 and shot up after that.

Pretty solid close on the Nasdaq considering the mkts. are weak leading to a holiday on Monday. They will be weak on Tues. and we should see a nice turnaround on Wed. following data that the economy is showing signs of weakness. The Fed has to be real carefull with these rate increases. Keep in mind that it takes up to 8 months for a rate increase take effect in the economy. What blows me away is that everybody is going on and on about Monetary policy and not fiscal policy. I learned in a Public Finance class that a year or two prior to an election, the current government will increase public expenditure to create more jobs. For example they will rebuild roads etc. and put money into health care. This causes pressure on the labour market as we have lesser number of people who would be unemployment.

IF the Fed increases rates and goes overboard:
We will certainly go into a recession as when the new government comes into power. Their first objective is to control cost for the first two years of their term. This allows them to save up for spending prior to the next election to help increase the probability of getting re-elected.
Just MHO. A degree in Economics helps I guess.
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