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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (35467)	11/13/2000 10:01:48 AM
From: Paul Shread	Read Replies (1) \| Respond to of 42787

The following should be required reading for whichever potential spendthrift/tax-cutter winds up in the White House: washingtonpost.com Unlikely Alliance Helped Build Economic Boom By Bob Woodward Sunday, November 12, 2000; Page W08 Federal Reserve Chairman Alan Greenspan jumped at the invitation to visit the man who would be the next president. Arkansas Gov. Bill Clinton had just won the election in November 1992, and he wanted to reach out to the powerful Fed chairman. So a month after the election Greenspan was asked to come to Little Rock. Greenspan, 66, had been chairman of the Fed for five years. A lifelong Republican, he had first been appointed by President Reagan in 1987. President Bush had reappointed him in 1991, even though Greenspan had had a very uneasy and contentious relationship with Bush's economic advisers. The chairman was determined to establish a good relationship with the new president, though Clinton was a Democrat. With a somewhat severe face, bespectacled, a bit hunched, narrow-eyed and pensive, Greenspan radiated gloom. He spoke in a gravelly monotone, often cloaking his thoughts in indirect constructions reflecting the economist's "on the one hand, on the other hand." It was almost as if his words were scouting parties, sent out less to convey than to probe and explore. On December 3, Greenspan took a commercial flight to Little Rock to meet with Clinton. As they talked alone in the governor's mansion, Greenspan found himself quite taken with the new young leader. Clinton was totally focused, as if he had no other care in the world and unlimited time. They ranged over topics from foreign policy to education, and Greenspan saw that Clinton's reputation as a policy junkie was richly deserved. The president-elect seemed not only engaged but engrossed. Greenspan saw an opening to give an economics lesson. The short-term interest rates that the Fed controlled were at 3 percent, as low as they could practically go in these economic conditions, he said. But the Fed could keep them there. The 10-year and longer rates were an unusual 3 to 4 percentage points higher than the short-term rate, at about 7 percent. The gap between the short-term rate and the long-term rate, Greenspan lectured, was an inflation premium being paid for one simple reason: The lenders of long-term money expected the federal deficit to continue to grow and explode. They had good reason, given the double-digit inflation of the late 1970s and the expanding budget deficits under Reagan. They demanded the premium because of the expectation of new inflation. The dollars they had invested would, in the future, be worth less and less. Perhaps no single overall economic event could do more to help the economy, businesses and society as a whole than a drop in long-term interest rates, Greenspan said. The Fed didn't control them — the market did. But credible action to reduce the federal deficit would force long-term interest rates to drop, as the markets slowly moved away from the expectation of inflation, and could trigger a series of payoffs for the economy. Clinton was so sincere and attentive that Greenspan continued. He outlined a blueprint for economic recovery. Lower long-term rates would galvanize demand for new mortgages, refinancing at more favorable rates and more consumer loans. This would in turn result in increased consumer spending, which would expand the economy. As long-term rates dropped, investors would get less return on bonds and move into the stock market instead. The market would climb — an additional payoff. The federal deficit was so high and cumulatively unstable, Greenspan said, that increased government spending to increase jobs — in accordance with the traditional Keynesian model — no longer worked. The economic growth from deficit reduction could actually increase employment — a critical third payoff. Greenspan noted that the economy was rebounding from the brief recession of 1990-91, but there was no telling if it would last. As had happened in the past, the recovering economy could fall on its face. Getting the long rates down and keeping them down with a strong deficit-reduction program could sustain and increase economic growth even more than the conservative estimates that were circulating in the government or privately. This conversation continued for 2 1/2 hours. Greenspan had not intended to stay for lunch, but he did. From the beginning he sensed that Clinton was different from the four Republican presidents Greenspan had seen up close — Nixon, Ford, Reagan and Bush. The chairman left the meeting thinking, Either this guy has a lot of the same views as I do, or he is the cleverest chameleon I have ever run into.

To: dennis michael patterson who wrote (35467)	11/13/2000 10:06:25 AM
From: donald sew	Read Replies (1) \| Respond to of 42787

With the NAZ down 108 right now, the SOX and NDX are showing signs of starting to diverge from the NAZ to the upside, which is a positive. Also PERFECT SHOOTING STARs on the NAZ and NDX, right now. Unfortunately the BTK negated the "3-WHITE SOLDIERs" Had limit order to buy the XLKLL's at 2.25, (XLK DEC 38 CALLS)