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Pastimes : All Clowns Must Be Destroyed -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (28105)	4/20/2000 10:30:00 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 42523

<<I am missing the forecast of a global recession>> Well that is the key to much of this. For starters: 1) Yield curve substantially inverted 2) Inflation rising 3) Fed already raised Fed Funds 125 basis points with result of worsening inflation. BubbleBoy (AKA AG)has indicated he will target equity markets if necessary to blunt aggregate demand. 4) Trade deficit at record levels for months. Likely outcome: 1) additional Fed Funds raises in May and June 2) Initial impact of above on equity and loan markets, both of which exhibit multiple characteristics of excessive speculation now. Increase loan defaults, bonds also drop, lending drops sharply. 3) Stock markets drop (or crash). 4) Foreign investors decrease exposure to U.S. markets due to (2)&(3). 5) Dollar weakens due to (4). Due to concern over collateralization backing money, Central Banks (particularly in Europe) decrease gold sales and gold carry trade activity. Price of gold increases as a side effect (and totally unrelated to industrial demand changes, BTW). 6) Due to 1-5 above: markedly decreased business activity, Fed unable to loosen money supply due to inflationary pressures already present. 7) Recession (or worse). There you go.