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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 337.09+0.2%Dec 4 4:00 PM EST
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To: MrGreenJeans who wrote (1153)5/16/2001 4:07:00 AM
From: marc ultra  Read Replies (3) of 10065
 
I think the things the Fed seems to be targeting recently are all the things directly related to the market in general and even technology in particular to some extent. That surprise inter-meeting cut in April along with activity into the present cut and Fed statements indicate concern about the lack of capital spending, poor earnings and a negative wealth effect Ever since Larry Ellison said suddenly nobody wanted to commit money to close deals and then was parroted by similar language by numerous other tech firms about hitting a brick wall, along with the collapse of software and B2B, it became obvious there was a problem that could not be readily cured by the usual gradualist action. The lack of IT spending would also inevitably affect productivity at some point as much of the lock down was in technology that were productivity enhancers.

Regardless what happens in the short term the table has been set for the next cyclical bull. however as the money supply continues to power forward we are likely also setting up conditions for the next bear as well. This could very well be the continuation of a secular bear as by the time the economy gets going strong so much money may be swishing around that increasing inflation/inflationary expectations along with a growth spurt could set the Fed raising again.

I agree when the new bull comes those who wait for a turn in the economy will be left behind. With this aggressive monetary expansion I would not be surprised if it could leave some timing models missing the bottom.

Marc
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