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To: sammaster who wrote (49410)	12/19/2000 9:28:19 PM
From: pater tenebrarum	Read Replies (4) \| Respond to of 436258

i see it this way: BECAUSE foreigners (especially Europeans) have begun to sell , or rather, have merely begun to buy LESS US equities, the dollar is beginning to head down. direct investment flows are also retreating fast as it becomes obvious that the US economy is slowing down. of course, once capital flows subside, you have the gargantuan current account deficit finally weighing on the dollar. btw, today's widely ignored trade number has imo played a role in the Fed's decision to stand pat. they are worried about the current account, whether they say so or not, and are very likely by extension much more worried about the frizzlebun and its external value than the stock casino. i agree that a rate cut will be greeted with a sell-off in the long bond. the bond crowd's bullish consensus is already in the stratosphere, and an important cycle turn for bond yields coincides early next year with both a projected stock market cycle turn and the rate cut. a normalization of the yield curve should however have a beneficial effect on liquidity, and thus the stock market. note, one of the effects of increasing liquidity could be that some of it will find its way into already inflating commodities and eventually other goods and services prices. i have no doubt at all Bugos' "liquidity seeks inflation" theory is basically sound, i.e. everything's a momentum play of sorts. that goes for real estate as well, which is likely the next shoe that's about to drop.