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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Raymond Duray who wrote (11229)	11/2/2000 7:17:30 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 65232

Ray, with all due respect, Courtney Smith is making an argument for 6-9 months out you are citing evidence for the present Smith is a man... he believes in buying stocks now since liquidity is tight, and will thus get looser as the Fed does its job... in his newsletter (which I get) he urged selling last March/April when liquidity was loose cost of doing business is getting higher, and will probably be less in 6-9 months I wouldnt worry about high cost of oil and energy... about one month ago I made a call that oil and service stocks had peaked... so far a correct call, indicating lower airfares in future months, not continued high fares... airline fares include fuel adjustments, true... but I doubt they will be next March I believe OPEC and Saudis will open the supply lines when the new US President is elected... so far they have made promises, but not delivered... I call it lipservice, to look cooperative, but do nothing of substance... crude oil cost will come down soon, esp since the US economy is slowing down corporate bond spreads are high and getting higher... exactly the reason why the Fed's next move is to ease... a recession or severe slowdown would cut so incredibly deep into Federal tax receipts that we would lose the surplus entirely... not good, not gonna happen on Greinstein's watch the Federal Reserve has two directives 1. oversee the US Banking System 2. oversee the US Corporate Bond market they are both sick right now the Fed will offer remedy soon watch their next statements after Nov15th FOMC it follows the election, very important Smith is one helluva market timer... I dont bring slackjaws to the VPorch to clutter up... Prof Psycho would cut me down... Smith is saying "BUY STOCKS NOW", since in 6-9 months we will be seeing the results of policy changes Angell's comments were predicated entirely on the Real Rate of Interest... i.e. FedFunds yield minus CPI... compared to last year, the RRInterest is much higher now... thus we have been experiencing heavier interest rates for months and months... as the Fed has raised rates 1.5%, the CPI is nowhere near 1.5% higher, thus higher RRInterest this is where the Fed misjudged... they raised rates, expecting for inflation to match the uptick... they were wrong, as inflation stayed low... so the Fed effectively raised interest rates a lot last spring... their goal is to keep RRInterest constant, as they anticipate inflation (I made a mistake before: Real Rate of Interest is FedFunds yield rate minus Consumer Price Index not TBond yield) except for crude oil, commodities are way down in price e.g. grains, metals, lumber service and other labor costs are rising this might be a real problem make sense? / Jim