Waiting for the big Kahuna Message Board

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Strategies & Market Trends : Waiting for the big Kahuna

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To: James F. Hopkins who wrote (25068)	8/25/1998 5:15:00 AM
From: Philipp	Read Replies (1) of 94695

Jim: As for the yield curve all I know is it's not healthy, I agree that an inverted yield curve at the moment is a very bearish sign, a bit like futures at a discount (Japan), implying that the market expects a recession (provided it is not a short-lived phenomenon). But the Fed cannot lower interest rates now. In my view it should have raised them significantly at the beginning of last year, causing a 10 - 20 % healthy correction and prevent the present unhealthy bubble from ever developing. If they raise rates now that is obviously bad for the market, but if they lower them that is just as bad since it implies that the Fed expects a recession (and they are the people who should know first)! I believe that the stock market is in a calm period right now with a slightly positive bias which will be terminated by a significant rally. But I don't think that this will last more than a couple of days to at most two weeks. And afterwards it will become interesting again. A bit like the calm before the storm. All the storm clouds are still on the horizon, Asia, Clinton and now a new unpredictable one, an Anti-American terrorism campaign (Russia is still not relevant). Cheers, Phil

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