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Strategies & Market Trends : Zeev's Turnips - No Politics
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To: Fiscally Conservative who wrote (4665)11/10/2001 11:15:26 PM
From: Zeev Hed  Read Replies (1) of 99280
 
As long as there is oversupply (or excess capacity) the danger of that excess liquidity causing price inflation is muted, thus there will be no rush during recessionary times to soak that excess liquidity, the problem, however, is that such excess liquidity may find its way to equities and cause equity inflation (a bull market), there will be a point where a ceiling based on valuation (relative to interest rates as well as projected earnings then prevailing) will put a ceiling on such a bull move. It is more likely, IMTO, that the stimulus will have a positive impact on the economy. If interest rates stay low, additional reliquification of corporate America should also be expected, namely, corporations exchanging high interest debt for lower interest paper (they have been doing that in a grand fashion recently). That will also have a positive impact on earnings. Better earnings and lower interest rates, should thus keep the market in a positive mood early next year.

Zeev
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