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Strategies & Market Trends : Waiting for the big Kahuna
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To: Mike M2 who wrote (14335)2/24/1998 10:46:00 AM
From: Tommaso  Read Replies (1) of 94695
 
I thought about it some more and I think they used to call it the "Shadow Open Market Committee."

I can't begin to imagine what will happen next. It appears that the Fed keeps expecting and trying anticipate and cushion a collapse in the equity markets by providing lots of easy credit. Then this adds inflation to the US equity market, making an even worse collapse likely.

There has certainly been terrific deflation in crude oil prices--perhaps the most important commodity for affecting price levels and economic activity in general. A forty percent drop has occurred since the last top in oil.

Maybe the the next big factor will be a genuine effort by OPEC countries to cut production, although they have been so ready to undercut and oversell one another that discipline among them seems very hard to enforce.

Without a stronger (and readily available) currency than the dollar to go into (gold, after all, is troublesome to shift in and out of), it is hard to see exactly what other than dollars anyone would want to hold in place of U.S. stocks. The big collapses in Asia presupposed the possibility of going into stronger currencies.

And the Fed is either creating dollars or allowing them to be crested at a rate that would guarantee inflation except that the supply of commodities and manufactured goods seems huge as well.



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