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

To: TRINDY who wrote (28538)	10/6/1999 11:56:00 AM
From: HairBall	Respond to of 99985

TRINDY: A very enlightened post. I think the Fed is still posturing for the coming Y2K effect. I am not expecting major problems in the US technically. However, I do think there will be enough folks both home and abroad taking precautionary measures to effect both the Equity and Bond Markets for a brief period near the end of the year and overlapping into 2000. Regards, LG

To: TRINDY who wrote (28538)	10/6/1999 12:15:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Trindy, your view of the Fed hits the nail on the head...they know it's a bubble and are unwilling to pop it, for fear of losing some of their powers in the aftermath. but they have only to thank themselves for the predicament they're now in, since it was their overly lax monetary policy that created the bubble in the first place. i also second the observation that the ECB is the most likely candidate for upsetting the bubble at this point. with regards to Japan, i fervently hope that the BoJ will continue to resist the widespread calls for debt monetization, as imo that would only serve to perpetuate the structural weaknesses of the Japanese economy. i do believe though that the BoJ realizes this and will stay the course. there still seems to be a lot of underestimation of the gathering pace of inflationary pressures...true, corporations have been unable to pass on rising input costs up to now, but that merely increases the pressure on them to do so at a later stage, as productivity increases can not be achieved at whim. the Fed, for fear of endangering the bubble, is way behind the curve by now. i think we will all marvel at how fast the CPI will increase when the pipeline pressures break through. as you say, eventually the Fed's hand will be forced. when that happens, a lot of wailing and moaning is certain to ensue...household and corporate debt have increased vastly in the bubble years. to everybody's astonishment, corporate bond defaults have reached levels this year normally seen during recessions...while the economy continues to grow apace. if one considers though that every dollar of GDP needs an increase in overall debt levels of $5,20 it becomes clear that the servicing of the growing debt pile becomes ever harder the longer the bubble lives on. well, we have all learned that calling for an end of the bubble is an exercise in futility - no-one can predict WHEN it will end. however, it will end at some point and considering that the imbalances in the economy become greater by the day, it won't be pretty. first though, the remaining bears and shorts need to be wiped out...a la Nikkei '89. once that is accomplished, we can go into freefall...<ggg> regards, hb