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

To: GROUND ZERO™ who wrote (31704)	6/4/2000 10:53:00 AM
From: Shtirlitz	Read Replies (1) \| Respond to of 50167

The more I think about it, the less enthusiastic I am about the "summer rally". I just don't feel the excitement. Lets look at the durable goods report, that gave the markets an initial boost. Sales and backlogs are down across the board. The largest plunge was in the electronic equipment, which was down 20.1 %. I undersatand the volatile nature of durable goods numbers,but no matter how you look at it, it doesn't look good. And this is a lagging indicator for the month of April. Considering that rate hikes take 3-4 month to work their way through, this looks like only the beginning of things to come. This drop could be attributable to several factors, and its hard to say what had more influence. Rate hikes themselves ? Phycological fear of more rate hikes ? Or are we starting to see some market saturation as companies finish their equipment upgrade cycle? I don't know. But 20% drop is not something to ignore. Another thing. About a month ago there was a wave of growth estimates cuts for the S&P 500. A lot of analysts have lowered their growth estimates numbers from 17% to 13-14% due to the anticipated slow down in the economy. I think the markets have chosen to ignore that for now, since no one is exactly sure of the extent of the future damage, people are hoping that their particular stock/sector will not be affected. You are absolutely right. Pressure on the CRB index has never stoped. Oil is back above 30, with absolutely no hope for further production cuts and increasing demand , especialy from Asia, as their economies recover. Dollar on Friday has closed below its 50 DMA. This may have helped to reverse the rally in bonds. Rise in gold on Friday is a big mistery to me. As it doesn't feel right. All this may sound a little pesimistic, but CAUTION signs are written all over the place. However all this may not stop the market from rising on pure sentiment.

To: GROUND ZERO™ who wrote (31704)	6/4/2000 5:48:00 PM
From: Shtirlitz	Read Replies (1) \| Respond to of 50167

Here is what I understand regarding the situation with the sliding dollar. There are 3 major factors weighing on it: 1. Perception of a slowdown in the US economy. 2. Due to the acceleration of economy growth in Europe on one hand, and recent fall in Euro on the other hand, ECB is being forced to raise interest rates, to avoid domestic and imported inflation. ECB decision is coming out on Thursday this week. Rise in European interest rates will further strengthen Euro against the dollar. 3. Continuing recovery of the Japan's economy strengthens yen's positions. The slide in dollar is dangerous, since with the huge US trade deficit it may cause fears about imported inflation and prompt Fed to hike rates further. And frankly I'm not seeing any catalysts that may strengthen the dollar at this moment. I'm starting to get a feeling that fundamentaly this market is trapped. Only greed, euphoria and ignorance may move it to the upside. These are very powerful factors, but I would avoid betting on them right now.