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

To: marcher who wrote (35799)	12/22/1999 5:38:00 PM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Marc, the bearish camp generally pins it's hopes on the Fed withdrawing the excess liquidity after January 1. however, they are mistaken. it won't happen. on the contrary, i expect the liquidity tap to be wide open until either a)the bond market collapses or b)the dollar collapses or c) inflation reaches an annualized 6-8% in terms of the CPI in spite of the statistical wizardry performed by the government, or a combination of those possibilities. the bubble has inflated too much...if there is even a slight contraction in the money supply growth rate it could quickly pop. never ever will the powers-that-be allow that to happen in an election year. the Fed will continue to raise the Fed funds rate by the usual completely ineffectual 25 bp's every three months and supply all the liquidity that's required through the back door. just imo of course... regards, hb

To: marcher who wrote (35799)	12/22/1999 7:17:00 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 99985

Marc, actually there is a source of liquidity on which the fed have very little control, and that is the liberalization of the Japanese Postal system, I calculated once that if only 2% of these funds finds their way to worlds' market, a bolus of $200 billion annually, of excess liquidity will be created. This combined with electioneering will prevent a major retrenchment, IMHO, next year (or at least until Autumn). Having said that, the current move, will be halted very shortly (sometime before the start of February, IMHO), and my reasoning is that bull markets rarely continue unabated for long after three tightening moves by the fed, and comes the first week of February we will have the fourth such move in place. Because of the excess liquidity, I doubt that will initiate a real bear market, but I could easily see the NAZ getting back to the 3000 to 3200 area before the next summer rally begins. After that, I think that frolicking will return. Zeev