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Politics : Idea Of The Day -- Ignore unavailable to you. Want to Upgrade?

To: IQBAL LATIF who wrote (30151)	12/20/1999 5:59:00 PM
From: FJV	Read Replies (1) \| Respond to of 50167

Ike, There are so many cross currents in these markets. The SOX looks great, yet IBM, TXN, INTC and MSFT showed some weakness today. BRK.B looks like it wants to reverse up here, yet the XMT (Merrill Lynch large cap index that has also been a good Dow proxy), along with interest rates and the BKX look just terrible. IMHO, AG is between a rock and a hard place here. He needs to remain accomodative to avoid any Y2K related "unpleasantness", yet the bond market is emphatically voicing its displeasure with all this excess liquidity. AG's stance has sparked fears regarding inflation as well as stability of the dollar. As a result, the yield in the long bond broke out convincingly above 6.4% on a closing basis today for the first time in over two years. If AG keeps a neutral bias tomorrow without another hike in rates, the stock market may love it - temporarily. BUT, the bond traders will continue to hate it and we may see 6.5% this week in the long bond. I don't think there is any way the BKX can recover with bond yields at 6 1/2%, and if the BKX remains weak, the spoos will eventually drop precipitously - and so will the NDX. If AG announces a tightening bias, the stock market will almost undoubtedly sell off, as fear of future Fed tightening will dampen the mania irrespective of the bond market's reaction to the news. And few,including myself, believe he'll raise rates outright tomorrow. If you agree that these are the possible scenarios of Fed action, then under what conditions do you believe that the SP00h can break out above 1442 this week? If you see possibilities other than those outlined above, please edify me. As always, thanks so much for your market wisdom and generosity of spirit. From one who usually lurks, your daily input has a very clarifying influence and is very much appreciated. I will attempt to contribute more to this thread if I feel whatever modest contribution I have provokes some thought. IMO, this is the only SI thread I have read without an axe to grind. This can be directly attributed to your enlightened guidance. Again, thanks Ike. Regards, Franco