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Strategies & Market Trends : MDA - Market Direction Analysis
SPY 687.86-0.4%Dec 29 4:00 PM EST
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To: Jim Willie CB who wrote (80947)7/29/2001 5:23:00 AM
From: ig  Read Replies (1) of 99985
 
I made the same point a few minutes ago in another post, before reading your post and without reading IBD. However, I didn't think it up myself, and I doubt the IBD writer did, either. Larry Kudlow has been saying this very thing for many months. (I don't agree with Kudlow on much, but he makes sense to me on this point and also with his criticism of Greenspan's erstwhile allegiance to the Phillips Curve.)

Here's what Kudlow said on this back on March 1:

...there is a cost to delaying these rate cuts. Think of it this way. If you know there's a deep discount car sale starting one week from now, will you shop for a new auto this coming week? Or will you wait to capture the price-cut benefits of the official sale? The same holds true for the economy. Since everyone in our well-informed website economy knows that future fed rate cuts are in the cards, they are likely to hold back on spending and investing actions until the Fed actually pulls the trigger. Hence delayed interest rate cuts will actually have the unwanted effect of delaying economic recovery. The Fed may believe it is acting prudently in an orderly manner by holding back until its formal policy meetings occur, but the unintended consequence of this thinking will cause a lengthier downturn in the short run."

ig
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