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Strategies & Market Trends : John Pitera's Market Laboratory
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To: Diana who wrote (4159)6/27/2001 12:09:55 AM
From: John Pitera  Read Replies (2) of 33421
 
the real turning point will be the concern that the Fed cannot lower enough to spur the US out of its profits
recession. . . that Greenspan cannot control this slowdown/recession. That would be a major mind-shift and
would cause real angst.

Hi Diana, that is an excellent point and I think that is why the FED has been so aggressively easing since Jan 3rd,
compared with the Monetary easings that occurred in the 1990-1992 period where we saw many .25 basis
point cuts in the Federal Funds rate and only one or two .50 point cuts. The Fed did not perceive us being in
the unwinding of a speculative bubble, certainly not of this magnitude back then.

If They do not aggressivelyFront Load the Easing Process, the thought is that they may not be able
to pull us out of a "Virtueless Cycle of Collapsing Prices"

And if you look at stock valuation metrics, such as PE ratio's , Price to sales, Dividend Yield, Replacement costs,
and Return on Equity, we were not in the 2000 era valuations in 1991 by any stretch of the imagination.

The thinking is that the Fed is cognizant that a perception may develop that a Global slowdown is not only
occurring but is in an accelerating phase and that the Fed and the other Monetary Authorities may not have
the tools to combat this trend before a lot of damage is done to the Global Economic and Wealth Environment.

John
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