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To: Mark Adams who wrote (62244)	1/26/2001 8:01:24 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 436258

Nice chart, Mark. A few comments: I agree that you can throw out the first 2 boxes for now. With the current Fed, it's all about outlandish extension of credit and currency expansion (with or without inflation for finished goods and services). Therefore the bottom 2 boxes should be your focus. Regarding the "deflationary" box, Contrary Investor had a GREAT article about 3 months ago outlining the same themes, ie, that banks, brokers, homebuilders would be the sectors that would benefit from the coming monetary easing. contraryinvestor.com I wish I'd have invested using that thesis! That consensus has indeed spoken in the market as demonstrated by the performances of the BKX, XBD and various homebuilders over the last month. These themes (of enhanced performance of dollar denominated assets) will dominate untill one of several events occurs: 1) the dollar declines as a result of excessive easing, noncompetitve rate yields, etc.. 2) foreigners repatriate funds significantly (either due to (1), ongoing sluggish performance of the US economy despite monetary easing or a regional crisis external to the U.S. financial system) 3) issues with substantial loan problems surface absolutely requiring problem loans being "marked to market"(not holding my breath on this one...the banksters are masters at concealment) 4) collapse of the real estate bubble begins in earnest Once any of the above occur to a significant degree, I would be positioned in the "4th box" of your matrix, as deflation is on the way. An obvious marker for this inflection point is the dollar. I would add that although foreign currencies may provide some measure of safety, the bubbles in the credit system are worldwide, and discretion in choice of proper foreign instruments is extremely important. Gold is certainly attractive, and currency (cash) should be as well, debending on how totally debased it becomes before we get to that point (see Germany, Weimar).

To: Mark Adams who wrote (62244)	1/26/2001 8:32:45 PM
From: pater tenebrarum	Read Replies (2) \| Respond to of 436258

quite reasonable approach...one has to also take a look of course to what extent do the stocks in these various sectors already discount the anticipated scenario.

To: Mark Adams who wrote (62244)	1/27/2001 5:50:23 PM
From: yard_man	Read Replies (1) \| Respond to of 436258

AL are producers definitely in a situation of excess capacity, Mark -- and that not just considering production that is idle now at the apex, but the future prospects of the end users of their product -- esp. autos & construction. I think ALCOA is net short or was at the last financial report I read ... Some of the smelters in the Nowthwest have power contracts that allow them to resell the electricity -- right now some of them can make more money selling the electricity instead of converting it to aluminum -- electricity is about 30% of the cost input. This has been in the news recently ...