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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: eddieww who wrote (46200)	12/11/2000 3:00:30 PM
From: Archie Meeties	Read Replies (2) \| Respond to of 436258

True, a strong dollar policy has been pursued. But I'm pretty sure they haven't said that the usd must always appreciate against other currencies. If it did so it would eventually price out every US export and crush US multinationals. During a commodity driven inflationary period a rising dollar is the preferable policy, but otherwise it's not of much use. As for conventional wisdom... As Heinz pointed out, Fed easing isn't always a green light to equities. In more sober times it could be perceived as acknowledgement of a weak economy and a further reason to shift into bonds. Not a likely scenario for us, now. -g- If the market is to generate a sustainable rally at the beginning of fed easing, the economy will have to support the reaccelation of corporate profits in 1-2 quarters. The more likely scenario is the corporate profit projection for q2-a3 of next year are still way, way too high (especially in tech). In the past this reacceleration has been fueled by consumer spending, which was dependent on debt expansion and a rising equity market. A negative savings rate and a struggling nasdung makes a quick response to easing less likely, and there are other concerns such as; a decline in tech capex, oil prices (which have not finished rising), and layoffs (which will begin in earnest in the next quarter). However, you'll notice that in this scenario a rising equity market has the ability to influence the underlying economy by returning consumer faith and freeing up a few more clownbucks to spend.