What the Fed giveth; the Fed taketh away .... it's coming
We will see a return to value and a return to hard asset investments/commodities.
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*from theStreet.Com
As Market Roars on Next Week, Listen to the Fed
By Justin Lahart
Senior Writer
1/8/99 5:48 PM ET
No, they are not happy about the stock market at the Fed.
They are not happy, and they are complaining. Atlanta Fed Gov. Jack Guynn complained on Monday of a "financial literacy crisis," and worried over "the institutionalization of unrealistic expectations." And there was Vice Chairman Alice Rivlin telling CNBC Thursday, "Surely the stock market is very high by any kind of measure. And I've been saying for some time, and so have a lot of people, that you have to be extremely optimistic about earnings to justify these stock values."
But this grousing has not counted for much with a market riding on what appears to be an unprecedented wave of liquidity -- even for the cash-rich month of January. Sure, valuations are high. Sure, earnings don't look so hot. Sure, interest rates are backing up. So what?
"None of this matters," said Larry Rice, chief investment strategist at Josephthal. "It doesn't matter to index funds. It doesn't matter to momentum traders. This is just mindless money getting poured into markets, with no sense of history."
...And with the ever-expanding valuations of those stocks, the risk that the Fed will do something them has risen. On the Federal Open Market Committee, Rivlin and Guynn are moderates whose thinking is close to Chairman Alan Greenspan's. Their concerns over the stock market are likely his concerns as well. There is a growing sense that when the chairman speaks before the House Ways and Means Committee Jan. 20, he may try, again, to jawbone the market down.>>
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...perfect timing; sector rotation coming end of January. |
