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Pastimes : The Naked Truth - Big Kahuna a Myth -- Ignore unavailable to you. Want to Upgrade?

To: MythMan who wrote (56118)	8/11/1999 4:57:00 PM
From: wlheatmoon	Read Replies (1) \| Respond to of 86076

no one cares.... maybe no one mentioned the solar eclipse to wall street...-g-

To: MythMan who wrote (56118)	8/11/1999 5:01:00 PM
From: Defrocked	Read Replies (3) \| Respond to of 86076

Let me offer the following misguided salve for the bears.<g> Today's market action and some very rabid talk by recently-assuaged bulls got me to reexamine my assumptions. Especially noteworthy was a comment that the Fed won't raise interest rates on Aug.24. IF the doesn't raise rates Aug.24 AND bonds rally a couple points I'll be selling them with both hands. Wow, that'd be a GREAT setup.<ng> Stocks would scream higher, ignoring the carnage in bonds for a while. The dollar would also potentially suffer in that scenario. Then the hedge funds and large unindexed fund managers would begin selling possibly on an unrelenting basis only to be joined belatedly by the general public. An expectation of "No Fed action" is a view I had completely discounted. Gawd would I would LUV to sell a 116 handle on bonds short! Consider, just for a moment, what a rapid rise in stocks from here would do to housing starts and prices and commodities in general. Unfortunately, or fortunately, Greenspan must realize this too. Therefore, my expectation is that the Fed MUST raise by 25 bps. Aug 24 or be considered totally irresponsible. After all, forward rates have already discounted the rise and the Fed will only be following the market. Stock bulls could get lathered up if PPI and CPI come in only at their current expectations of .3 for July. That also would be a great setup for Aug. 24 in my view. However I believe the PPI and CPI numbers will come in higher than .3 based upon oil price inflation alone. Consider the following table which presents the percentage change in the monthly avg of the nearby crude contract. Mar 18.90% Apr 19.30% May 2.90% Jun 1.60% Jul 12.00% Aug 5.50% Avg. 10.03% 10%contrb. 1.00% The crude oil complex represents at least 10% of the CPI and PPI. Nearby crude has been increasing recently at a monthly avg. of 10% and should impact the inflation numbers by 1.0% on average. Yet only the April CPI reflected this weighting. Well, its time for some catch-up folks.<eg> And I believe AG knows this as well. If he doesn't get infront of this train he'll foster inflationary expectations this fall and, even worse, a falling dollar. Oh yeah, I forgot to mention the US trade balance for Jun comes out Aug.19th.<eg> Interest rates are going higher and will prompt profit taking in the stock market. Of course it took a while in '87 and could again now. But there will be better opportunities to buy stocks than today IMHO. BIODKJS.