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Strategies & Market Trends : MDA - Market Direction Analysis

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To: Justa Werkenstiff who wrote (76743)	5/10/2001 7:40:08 AM
From: Zeev Hed	Read Replies (4) of 99985

Justa, overcapacity is one of the major problems here that will not go away fast. One reason that I suggested the coming tax proposal should be directed less at the "investment side" (adding capacity) and more toward the consumer side (adding demand and thus bringing capacity more into equilibrium with demand). I know this position is not very "Republican", but that is what I "see". Medium term, I think that most commentators are right in not taking this facet too seriously right now, this because another factor acting on stock prices is liquidity, and that has been pumped into the economy in spades. Longer term, after this Fed induced "recovery" fades by the middle of next year, I think we will be faced with the triple whamo, over capacity, consumer retrenchment and shrinking liquidity (if my guess that sometime next year the fed's will be forced to reduce liquidity and possibly even raise rates). Zeev

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