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Strategies & Market Trends : Pump's daily trading recs, emphasis on short selling
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To: Michail Shadkin who started this subject5/15/2001 10:10:10 PM
From: Michail Shadkin   of 6873
 
Outlook for the rest of the week:

Before I get to my views, here are some interesting stuff that was written on Briefing.com about FOMC decision.

"The Fed's announcement was very bullish. The Fed removed its comment about "monitoring developments closely" and thus the likelihood of an intermeeting cut. But there was nothing in the announcement that indicated the Fed sees a turn in the economy. Policy makers continued to make the following points: capital spending is declining, there is a negative equity wealth effect, and importantly they expressed continued confidence in the view that productivity growth remains strong and inflation risks remain low. "

"The Fed's next meeting concludes on June 27, at which another rate cut is a good bet given our view that the consumer will be the next leg down for the economy. But make one important note: the Fed did not say that they are likely to cut rates again -- they never say that. Policy makers only indicated that the balance of risks lies on the side of excessive economic weakness, not inflation. What they do next is dependent entirely on the economic data from now until Jun 27."

"To clarify an earlier comment, the Fed statement was bullish in terms of future rate cuts, not in terms of the economy. In fact, the Fed's economic view stands in contrast to the market's. They clearly put little weight on recent consumer data, and appear to believe (as Briefing.com does) that the consumer will be dragging into the mire of falling corporate profitability. They also put little weight on arguments that inflation is a risk or that long-term productivity growth is faltering -- these are bullish indications for future rate cuts."

My views:

It was pretty obvious that investors were disappointed with the feds view of the economy.
I disagree with the fed regarding inflation risk.
2.50 points of cuts in 4 months can have a very drastic effect on inflation. We have already noticed PPI and CPI rising, as well as, inflationary payroll numbers.

Fed is running out of bullets.
Probably 1 more cut in June will end it and probably only 25 points.

There is nothing to drive this market higher now.
Fed is out of the way and earnings season is past us.
Warning season starts in 10 days (put your seat belts on and get your self a hard hat)

I see a slight gap up in the morning, followed by selling pressure.
I expect the market to close lower every day the rest of this week.

Michail
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