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

To: Haim R. Branisteanu who wrote (67813)	1/27/2001 11:11:27 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 99985

Interesting Statement will the senile AG follow? On the U.S. economy, Fischer said the Federal Reserve could cut interest rates by up to five full points without stoking inflationary pressure. "Not that I think that will be necessary," he said. Its Fed funds rate on overnight lending stands at 6.0 percent after a half-point cut on January 3, and the Fed is widely expected to cut rates a further half-point at its meeting on January 30-31. "The aggressive action by the Fed earlier this month was extremely welcome and one of the main reasons to believe that the turnaround will come reasonably soon and that the slowdown will be more v-shaped than anything else," Fischer said. Fischer stopped short of urging the European Central Bank to cut interest rates, saying that despite a slowdown in European growth during the second half of 2000, its economic position looked "pretty strong." weforum.org

To: Haim R. Branisteanu who wrote (67813)	1/28/2001 6:29:17 PM
From: Doug	Respond to of 99985

Haim: Inflation is currently measured in terms of CPI. That index does not include 2 important factors, viz Stock prices and real estate. These 2 items have grown in relevance since the 80's as more and more Americans depend on them for their retirement plans. Creating a stockmarket bubble has not produce the growth in revenue/profit to support higher stock prices. In addition to the experiment in Japan, we have recently seen our wealth bubble expand and collapse.. The current TECH woes are not entirely due to interest rates. The bigger percentage of the problem is due to over /excess capacity, consumer resistance and artificial sales due to vendor financing due to cheap money.. These ills have to be corrected. They will thru a period of consolidation and write downs. This has happened throughout history and High techs will not be an exception. Till we have completed the shake down process, Techs are likely going to be very volatile. This is excellent for traders but far less suitable for long term investment. An interest rate cut will only stretch out this process and perhaps make it less painful. Consolidation and reduction of capacity is inevitable . The outstanding question is whether it should be quick and decisive or slow and drawn out. Until that excess capacity is cleaned out, the high Tech's can only provide short term trading oppurtunities. Regulation of the derivative market is very tricky because to do so you need to set transparent standards. The money centerd banks dont want their derivative exposure assessed publicly because it will affect their valuations. The current system suits them and is likely to remain so. To reduce speculation, some economists have suggested a witholding tax tied to some time constraint. The current trend for the average holding time of an equity is less than 8 mths vrs 3 years in 95. An increase in money supply may likely further reduce that period this year.