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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: KevinMark who wrote (64479)	12/17/2000 3:18:39 PM
From: Gary Burton	Read Replies (3) \| Respond to of 99985

Kevin--My2c is that in truth Bush does NOT want a rate cut before he takes up office in January...He DOES want to make it appear to the public that he wants one now since his agenda is to convince people that he is compassionate and cares about people in general. So, he is doing what many politicians do-say one thing and think another. He will remember well what happened to his father when the economy started to weaken close to when he was pushing for re-election. W will want to put himself in a position to blame in 01/02 virtually everything on Clinton's regime and a recession in 01 due to Greenspan waiting too long would be just what the doctor ordered from W's point of view. Why on earth would he want to take the risk of keeping the already long in the tooth economic engine going so that it can start to really sputter in say 03 going into 04? That's what happened to his dad and W will do everything in his power to ensure that it doesn't happen to him. The man would also have to be a complete political fool to have his nemisis Mr G to upstage his taking office by cutting rates before he even started work and thereby again taking the credit in steering the economic back up again into 02 and beyond. And he likely also knows that if G cuts rates now like Wall Street wants, the mo-mo crowd will goose the Naz up yet again and the bubble may well re-expand---which will make it doubly difficult to diffuse next time around....He is meeting G on Monday for public relations purposes-privately hoping that Greenspan doesn't really lower rates on Tuesday. For Mr G's part, if he was a mite reluctant to cut rates on Tuesday, he will become doubly reluctant to cut rates 1 day after he meets W, a man he likely dismisses as a silver spoon lightweight and nowhere near the stature to even be in the same room as Mr G--in Mr. G's mind.----the more W tries to jawbone him, the more G is going to resist.

To: KevinMark who wrote (64479)	12/17/2000 3:34:40 PM
From: KymarFye	Read Replies (3) \| Respond to of 99985

You make three clear points: 1) Rate cut: You may be right about the unwisdom of attempting to manage a recession in hope of political gains down the line. If the "virtuous circle" is allowed to get too vicious, recovery from it may not come on some preferred schedule. If a recession comes hard and fast, Federal budget projections may also start becoming subject to revision, hitting potential flexibility either for a "mega"-tax cut or for social security part-privatization from the opposite direction. Unfortunately, the other kind of tax cut, and the one that might both make the most sense and help the market as well - capital gains - is the one that Bush failed to run on. All this said, the readiness of the Fed to act now remains doubtful: No one who claims to have a good line on the situation seems to be predicting more than a shift in bias next week. To me, the idea that Bush is in any position to apply significant pressure one way or the other seems even more doubtful. 2) Cash for a rally: Could you give a little more flesh to your "$4 trillion in losses" figure? What does the number precisely take into account? What does it leave out? 3) Long-term stagnation: Here, I think you may be overreaching: You state: "The home PC changed the world as we know it, and there are no more technology inventions on the horizon that will change the landscape of this world like the PC revolution." Now, how could you know that? How many people predicted the PC revolution prior to its occurrence? There are arguably several well-known and fairly well-developed and -applied areas of R&D (from fuel cells to biotech to bluetooth or some evolved form of it, just to name three) that have the potential to "change the landscape of this world," and there are others that are less well-known or well-hyped, though how long it might take any of them to do so, either independently or synergistically with other advances, is inherently unpredictable. Likewise unpredictable is the extent to which any of them might alter the macroneconomic picture, or, to introduce yet another variable, how much even desirable alterations in the macroeconomic picture will affect the stock market. It's been argued, for instance, that, though high growth may be the natural condition for the U.S. economy, higher growth in stock prices may not be. Who knows? Over the years, I think we've all seen many seemingly persuasive scenarios for the future turn out to be virtually meaningless where not completely misleading.