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

To: Benkea who wrote (23723)	8/24/1999 5:52:00 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 99985

they said exactly the same thing last time around...imo they completely underestimate the inertia of economic trends. all the major forward looking inflation gauges are pointing up regardless of the rosy picture painted by PPI and CPI. rate hikes otoh only start to have an effect with a considerable time lag of between 1/2 to 3/4 year. a reasonable expectation would therefore be that forward looking inflation gauges will continue to point to developing price pressures and the Fed will therefore continue on it's tightening course. the main problem remains the stock market - the bubble is affecting the economy more and more and the Fed will be forced to take harsher measures to restrict it's growth before it gets completely out of hand. w/regard to that i would expect that it will get out of hand anyway, and that the Fed in it's attempts to stop it will in the end unwittingly instigate a crash. the only scenario in which the economists predicting no further rate hikes will turn out to be right, is one in which the stock market suffers a severe correction, which would serve to restrain consumer spending. that is unlikely to happen unless we see more tightenings in the near future, thus the prediction of no more rate hikes is likely a fallacy.