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Pastimes : Home on the range where the buffalo roam -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (7614)	12/16/2000 6:01:52 PM
From: mishedlo	Read Replies (1) \| Respond to of 13572

Zeev's well stated reasons why he believes no rate cut until March (with Jan at the earliest). Unemployment is at 4%, just .1% above what should be considered an all time low. Wages are rising faster than the fed's would like. The last inflation reading was actually a bump up masked by recent declining energy prices. Consumer confidence, despite declining to the 100 area (from 140) is still very high by historical standards. And last, but not least, if Bush rush to get a tax cut in places, a fed easing coupled with a tax cut will revive inflation so much that a real recession will have to be induced to stop it. AG wants a soft landing (growth declining to about 1.5% to 2% for a quarter or two and is willing to risk a non recession dip to just one quarter of negative growth, IMHO. A loosening of the monetary spigot with loosening of the fiscal spigot will get us back to the Reagan era of huge ballooning deficits and worse, increase in our trade deficit to an unsustainable rate of $50 B per month. I think that the first task is to reduce trade deficits and an overheated economy soaks a lot of foreign goods. The earliest I see an actual cut in the Fed rates is late January, but the turnips do not count on one until early March (thus the turnips forecasted low for late February early March). If the feds change their mind because the economy goes into a real tail spin, then the turnips may change theirs as well. I would watch for numbers like new job creation (if they become negative or even under 30,000 per week moving average), unemployment going above 4.5% two or three months of CPI under .18% or so. On the other hand, an exogenous event, that has the potential of causing major financial dislocations, like the collapse of a major financial institution here or oversea, or a group of SE-Asian countries on the verge of defaulting on their debt, may cause the feds to move faster. Another exogenous effect could be a one week drop in all US financial market by more than about 15% or so. But if the latter would occur, I would probably have a sequence of 5 days of tic on the naz at worst than -1000, with a peak of worst than -1400 to let me know that the bottom is near. As for right now, I think you should enjoy the one or two days rally (ending Tuesday before 3:30?) and be ready to pick up bargains again either just before or just after Christmas. If you do, do not overstay your welcome past the first or second week in January (g). Zeev -----