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Strategies & Market Trends : Booms, Busts, and Recoveries -- Ignore unavailable to you. Want to Upgrade?

To: Gemlaoshi who wrote (925)	11/25/2000 12:36:51 AM
From: Hawkmoon	Respond to of 74559

Yeah.. I see that data quite a bit tossed around. I may be wrong to place as little confidence in it as I do. Bottom line, IMO, is that Americans ARE saving money. They are just doing it in a different way than has been traditionally measured. Rather than parking it in CDs or savings accounts(which is changing now.. see below), people are investing it for the long-term. Just look at the money inflows for the mutual fund industry on a monthly basis over the past 12 years: trimtabs.com In sum, money flow vs supply of stock dictates the direction of the markets. trimtabs.com "Where's the cash going if not into retail money market funds? Answer: the bank. Savings accounts + small CDs up $64 billion in October. Retail money market funds have about the same amount of assets now, $904 billion, as they did at the start of October. In fact retail money funds even before October were growing 50% slower than last year's pace and well below the record flows of 1998. Are consumers not generated as much cash as they were, are is the cash going someplace else? The answer: cash is pouring into bank savings accounts and small denomination CDs. The most recent federal reserve's h6 reports that as of November 6, savings accounts and small denomination CDs popped a whopping $64 billion to $2.9 trillion -- a 26.3% annualized pace-- since the start of October. Banks offering higher rates than money markets. Why? Because interest rates are higher now at savings accounts and at new issued CDs. The growth in bank deposits is rather interesting because loans to both individuals and commercial accounts basically has been flat since the beginning of October. Even credit card debt recently is only growing by a 5% annual rate. Is this as a result of a weakening of the economy that conventional wisdom says is happening? Or is this the result of individuals and banks holding back new activity based upon a fear of an economic slowdown? Bottom line: we stay bullish. Huge cash buildup everywhere says boom likely" ***************** So while the "dismal scientist" is great reading, the surest sign of how this economy is doing, and the eventual direction of the market is by watching the money flow.