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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (16993)	6/12/1999 11:10:00 AM
From: Les H	Read Replies (1) \| Respond to of 99985

The banks (BKX) came into a very strong support area at 819 which held April to July of last year and also bounced off the level several weeks ago. If it breaks this area, the decline would likely gather momentum as it did in July-August of 1998. This time the market has two things to worry about when the Fed meets next: (1) the rate increase and (2) Fed commentary about bias toward future tightenings.

To: James F. Hopkins who wrote (16993)	6/12/1999 12:03:00 PM
From: Berney	Read Replies (1) \| Respond to of 99985

Jim, Casaubon and Sonny, et al: Jim is absolutely right that the federal "surplus" is an illusion and I think most people on this thread understand the concept. If a taxpayer tried to maintain his accounting records in the manner the fed does, he would be hauled before the justice system on fraud charges. I don't have a 1998 1040 instruction booklet, but the 1997 booklet showed that 15% of all federal outlays represent the interest on the national debt. If you increase interest rates by 10% (I think we can agree that they have gone up more than this), government expenditures increase by 1.5% without a corresponding increase in revenue. The fed funds this difference with IOU's, debasing the currency, and this is inflation. In supply and demand issues, real or imagined (i.e. oil), businesses adjust costs and prices, and life goes on. On the other hand, the interest on the debt is an annual event that will only get worse. I believe that some of the fear we are witnessing is by folks that understand this concept. They are reasonably concerned. BWDIK Berney