Henry, how have you been? I was surprised like everyone else by the sudden sharp decline in short term rates, so I looked for a reason. I could not find any, until I looked at the National debt in the last few weeks. Well, in the last week it declined by a whooping $75 Billions. I believe that the current swoon down is an aberration due to large receipts of corporate income taxes and the government parking these in T-bills, it will evaporate. The talk about the feds reducing rates, is IMHO, nothing short of leading the "lambs" to the altar, so they rush and buy stock that the big boys have not had a chance to unload as yet. It also plays well with the fear mongering our Pres and VP elect are engaging in order to pave the way for the tax cut plan.
Do you eally think that AG will lower interest rates when unemployment is hovering .1% above its all time low? When durable goods numbers are perking again, when new jobs creating exceed consistently 30,000 per week? I think that until we see the unemployment at 4.5% at least and for at least few months, not an aberration, the Feds will have no reason to prime the pump. Any priming they do will end up in the financial markets and they are not interested in another bubble. Of course, a financial catastrophe here or abroad, that is another story, but AG will keep his powder dry, IMHO, until such a catastrophe forces his hand.
Happy holidays to you and yours
Zeev |
