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Strategies & Market Trends : MDA - Market Direction Analysis

SPY 670.92

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Nov 7 4:00 PM EST

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To: Les H who wrote (64305)	12/15/2000 1:57:41 AM
From: Andrew G.	Read Replies (1) of 99985

Lee: A few pertinent questions: Isn't it interesting that we don't here much discussion for what attributed to the gang busters growth that precipitated this tightening monetary policy ? When you turn down the growth with higher rates, don't you need a formula to turn it back on again if you take it down too hard ? Lowering rates alone doesn't pay down the debts of a recession once it's started. The Washington Post article that you pointed out has this quote: 'We've got a slowdown, and a lot of people are quite nervous," said Fed governor Edward M.Kelley Jr. "That's quite predictable....But it's far too early to make a judgement on where the slowdown might stop. If we had a touch-and-go and went back up to high rates of growth, that would be dangerous." Really, Mr. Kelley ? And where might that revived growth come from ? Where did the growth come from to begin with ? Didn't it partly come from the high dosage of reduced rates in reaction to the 'Asian Flu Crises" coupled with the burgeoning Internet Mania ? Didn't the fall in energy prices, and the highly leveraged capex spending and loose consumer lending fire up the economy as well ? Now that the Fed has apparently put out the flames of 'excessive growth' what catalysts will revive the flames if we crumble into a recession ? Lowering interest rates will fan the flames of debt without providing a guiding light toward profitability . The technological changes of the past decade have reached a plateau and internet e-commerce has become a bust. The three remaining burgeoning areas of 'explosive growth': biotech (genomics), wireless 3G and fiber to the home, are years off and vastly more expensive than anticipated. Where is the catalyst for positive change ? In renewed speculation in 'New Economy' stocks? Haven't we just been there ? Hasn't 'the wealth effect' done enough damage ? I don't believe that Dick Cheney was being an alarmists recently by frankly stating that the next president could be faced with a recession. From Turkey to Taiwan, a global financial crisis far greater than that of 1998 is on the horizon. All the debt laden financial institutions, corporations (private & public) and consumers have born evidence and there is no distinct catalyst to thwart the ensuing onslaught of more debt. Am I too jaded and foolish to not see a bright horizon just around the bend or a tad wiser for not wanting to speculate on another desperate attempt by fund managers & analysts who insist on having a 'Santa Claus' rally and 'January Effect' because they want it to happen? Cash is king in uncertain times and I will remain there for now. But I'll be vigilant and hopeful that things will get better in the coming year.

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