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

To: Dave-in-MarinCa who wrote (56339)	7/10/2000 4:16:50 PM
From: Haim R. Branisteanu	Read Replies (3) \| Respond to of 99985

If you refer to the stock market as related to FED Funds you are right. Stock market participants are in denial. FED FUNDS 4.85% in July 1999 6.85% in July 2000 gain 41% in 3 month paper NAZ in July 1999 2330 NAZ in July 2000 3850 gain 65% in NAZ stocks (last Friday) earnings growth 12% interest adjusted gain 142% above normal (65%/41%/1.12= 142%) Those calculation assumes an interest sensitive maket were the ratio of earnings to interest rates is stable. The NAZ is 142% overvalued at present FED FUNDS in relation to first week of July 1999 (same anticipated earnings growth and other BS). Fair value as related to real earnings should be below NAZ 2000 with today interest rates. What bubble were bubble BWDIK Haim

To: Dave-in-MarinCa who wrote (56339)	7/10/2000 4:24:15 PM
From: pater tenebrarum	Respond to of 99985

Dave, orchestrated only applies insofar as the discount rate is fixed, and the Fed funds rate 'targeted' by the Fed. furthermore, Somewheres continues to buy back long paper, so there's some orchestration at that end as well. the yield curve inversion is however not the only extreme the credit markets are saddled with - the other are corporate spreads. if i didn't know better, i'd be thinking the credit markets are pricing in increasing RISK of default....-g- but not to worry! the fiddling with short term rates by a gaggle of bureaucrats will deliver Utopia in short order... regards, hb .