Stocks Crossing The 13 Week Moving Average <$10.01 Message Board

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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01

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To: Sergio H who wrote (10018)	10/4/2001 12:20:21 PM
From: James Strauss	Read Replies (2) of 13094

Jim, any comment on the fed fund rate now lower than the rate of inflation? Sergio: Normally you like to see a 2% to 3% spread in favor of short term interest rates over the rate of inflation... This usually happens in a normal economic environment giving a 2% to 3% real rate of return... With recessionary pressures keeping inflation intact, it was just a matter of time until interest rates fell below the rate of inflation... This gives the fixed instrument investor a negative rate of return... It makes equities more attractive, especially blue chips that pay 3% to 5% in dividends... So, for the short term I see this as positive for the stock market... Some time in the next 12 months we could see the inflationary effects of all this liquidity being pumped into the economy... But, the inflationary impact should be milder than expected with the leveling off of oil prices... The new closer U.S./Russian alliance of convenience will not only partner us up in the fight against terrorism, but also in the extraction of oil from the surrounding Russian oil rich territories... This will loosen the grip of OPEC on western foreign policy considerations in the future... Osama Bin Laden, hoping to brew a world wide East vs West conflict has ironically brought together recent past foes that will put an end to his perversion of Islam... Jim

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