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Strategies & Market Trends : Classic TA Workplace

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To: Perspective who wrote (33819)	3/9/2002 12:09:44 AM
From: Rarebird	Read Replies (1) of 209892

Excellent Post. Economic and Financial Reality is certainly on your side. So is Truth as unconcealedness. But who is interested in that nowadays? Concealedness holds sway at the moment. Look at The Fed funds futures contracts. They are now discounting an 80% probability of 50 basis points in Fed tightening by mid-year, with 25 basis point hikes seen as probable at the May 7 and Jun 27 meetings. Interest rates were spiking again today, with the 10-year Treasury note up to 5.31% and the 2-year note rising to a post-9/11 high of 3.53%. Rising rates will restrain growth in rate-sensitive sectors such as housing. I find that Clownish. Fed Rate hikes with the government rushing headlong into deficit spending? I'd like to see that. The Fed won't raise rates until they HAVE to, and when they HAVE to, it won't have much to do with "cooling down" economic growth. The fact that ALL of the firming economic statistics are due to a MASSIVE increase in government deficit spending is deemed irrelevant. The fact that consumers are borrowing twice as fast as their incomes are growing is deemed equally irrelevant. The fact that President Bush has just done EXACTLY the same thing as the Hoover Administration did in 1931 is totally ignored. Everything is being ignored, except that government accounting practices have given birth to a slew of encouraging economic statistics. Strange how no one EVER questions government accounting practices, especially when just weeks ago, corporate accounting practices were threatening to sink U.S. markets terminally. Here is my read: What we have here is a grace period for U.S. and world economies and markets. The grace is truly amazing in that it flies in the face of any semblance of economic or financial reality. But that's a Big Bear Market Rally for you, one that will likely retrace 1/3 to 1/2 of the losses in the NAZ from March 2000 to September 2001 before it receives another 75% haircut again. Potential Catalysts down the road to end this upward correction? 1) There is the international reaction to Mr Bush's steel tariffs. 2)There is the lead up to the end of the Japanese financial year at the end of this month. 3)There is the countdown towards the U.S. government lifting its debt ceiling. A very bad tragic ending is insured here IMO.

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