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

To: Doo who wrote (36068)	12/28/1999 8:59:00 AM
From: pater tenebrarum	Read Replies (1) \| Respond to of 99985

Jeffry, the link between money supply growth and stock prices has been proven beyond reasonable doubt imo...IF the Fed withdraws the excess liquidity next year (a big if), stocks will suffer. regards, hb

To: Doo who wrote (36068)	12/28/1999 9:07:00 AM
From: Les H	Read Replies (1) \| Respond to of 99985

"U.S. Financial Data" Cover page December 2, 1999 The Federal Reserve System has anticipated a sharp upswing toward the end of the year in the demand for currency. Although currency demand usually picks up appreciably during the Christmas season, this year's increase is expected to be greater than usual because of the so-called "Y2K effect." Because the Fed has agreed to meet this increased demand, growth of the monetary base--what the textbooks refer to as "high-powered" money--and the M1 monetary aggregate will accelerate. The process works as follows. An increase in currency supplied to depository institutions (DIs) increases their vault cash, and thus both adjusted reserves and the adjusted monetary base (AMB). Growth of total vault cash at DIs has accelerated dramatically recently, up 17.7 percent in November from a year earlier based on preliminary data (versus 0.5 percent growth between November 1997 and November 1998). This development helps to explain why AMB growth has accelerated since August. Little of this new vault cash is being used to satisfy reserve requirements; most of it is "surplus." To date, growth of currency outside of DIs has accelerated modestly: After increasing 8.4 percent between November 1997 and November 1998, currency has grown 10.4 percent for the average of the four weeks ending on Nov. 22 from the same period a year earlier. The growth rates of M1 and M2 have not accelerated like the AMB's rate. But if the public becomes very hungry for currency later this month, then M1 and M2 growth will increase sharply. Regardless, this phenomenon is expected to be temporary, with no lasting consequences for money growth, and hence inflation. from St. Louis Fed Also, Northern Trust article on pickup in inflation ntrs.com