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

To: bearshark who wrote (36369)	1/1/2000 1:48:00 PM
From: Rarebird	Respond to of 99985

<Is it a raging economy or was it Y2K inventory growth?> It was a combination of both. The raging economy, as your well aware, is primarily based on the tulips growing in our stock market. The real question here is how much longer will investors, traders and speculators continue to ignore the deteriorating fundamentals? New ERA tells us fundamentals no longer matter. As a student of history, I know that at some point it will matter. The decisive question is when will it matter. Higher Rates eventually crimp corporate profits. But everything is ignored on behalf of tulip growth. When does reality come to the fore? When the earnings warnings come from the high profile companies?

To: bearshark who wrote (36369)	1/1/2000 6:18:00 PM
From: Investor2	Read Replies (4) \| Respond to of 99985

Re: "They may up rates again in two more quarter point efforts and realize that the economy has continued unabated. Then they have to move more forcefully. They may also do a repeat of 1980 and 1981. They may think they have slowed things and let up too early and then have to reinstate even higher rates." They may also repeat 1994. In this scenario, they would continue increasing rates while the economy slows. The common financial wisdom will be that the Fed is going too far and that they will drive us into a recession or worse. That fear will turn out to be overblown, as the Fed will once again successfully direct us to a soft landing. The soft landing will not be enough, however, to prevent a 20%+ correction (i.e. bear market), since equity valuations are so high right now. But, to the surprise of the bears in the crowd, the soft landing will be enough to prevent the major financial crash so often predicted along with the bubble-popping theory. Best wishes, I2