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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED
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To: limtex who wrote (38236)6/27/2001 11:39:54 AM
From: Jim Willie CB  Read Replies (3) of 65232
 
Fed is likely to ease only 25 bpts
according to FedFundFutures, 90% chance of just 25 bpt
they are running low on ammo
if not careful, the Feds will be down to 0% by Christmas
they must slow their pace

their historical pattern is to raise rates until the economy shows signs of stalling
which means they raise too much
to do nothing on reversing policy until it is painfully clear they are late
which means they wait too long to reverse
to keep cutting rates until the economy shows signs of perking up
which means they ease too much
but now they are probably gonna do just 25 bpt imo

I repeat the historical patterns that have withstood tests of time
inverted yield curve last autumn forecasts a Q3 recession to begin
the fact that the Fed allowed the yield curve to remain inverted for over four months means the recession will not be brief
but with no Cold War, and with minor tax cuts in pockets, this recession wont last long
I still believe the recovery begins in spring2002
with a hiccup at Christmas2001

a major unnamed retailer is showing negative sales growth in all regions, three straight months
never happened before in it relatively brief history

yes, Europe has now begun its economic decline
and Asia is dealing with minor shockwaves out of Japan
my best educated guess is that Japan will see serious unwinding of bank treasuries, serious declaration of death for "walking dead" corporations, and will NOT see bailouts from the government anymore
this will deal the Pacific Ocean with a TSUNAMI
all before the Sept 1st deadline

/ Jim
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