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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (71556)	2/25/2001 2:16:17 PM
From: John Madarasz	Respond to of 436258

The Big Hook elliottwave.com A year ago, The Elliott Wave Financial Forecast (EWFF) published a chart of the Japanese Nikkei 225-stock index and asked, “Is this the model for the NASDAQ?” Apparently so, as the NASDAQ’s decline has been closely aligned with the Nikkei’s decline from its 1989 peak. So far, the resemblance even extends to central bank policies. Take a look at the chart. The Fed raised rates in the wake of the NASDAQ’s initial decline, just as the Bank of Japan (BOJ) tightened during the first leg down in the Nikkei. It wasn’t until the Nikkei was down nearly 45% that the BOJ dropped its discount rate. The NASDAQ was off 55% when the Fed finally cut rates on January 3, so the Fed is even further behind the curve than the BOJ was in 1990. The chart shows that no amount of easing stemmed the post-bubble selling tide in Japan, where the discount rate hit 0.5% in September 1995. It has been there ever since, yet the Japanese economy is mired in a slump and the Nikkei is off 65% from its all-time high. What will they do next, pay people to borrow? In 1929, the Federal Reserve’s response to the crash was almost immediate. Four straight rate cuts appeared to pay off for a few months, but in April 1930, the stock market rebound ended. Steady cuts from 6% in October 1929 to 1½% in May 1931 did not stop the Dow from falling almost 90% through the middle of 1932. Despite the historical evidence, the belief in the Fed’s ability to pump air back in the bubble is stronger than ever. Consider what happened December 5 when Alan Greenspan announced a new policy “tilt” toward lower rates (even though he perceives the current danger as “no way comparable” to that of October 1998). As this front-page banner from the next day illustrates, everybody knew what the action meant: Economic Euphoria —Rocky Mountain News, 12/6/00 In the wake of the big news, however, a funny thing happened. The market went down. As a matter of fact, despite every indication of an actual easing at the next Fed meeting, the NASDAQ fell another 20%. The “emergency” rate cut of January 3, took the Dow up 300 points, as investment bankers everywhere broke into high fives, analysts were quoted saying “Hallelujah!” and investors concluded in a matter of minutes that “a new bull market” was underway. We’ll see. If you want another view of this dance, read “The ‘Potent Directors’ Presumption” in Chapter 19 of The Wave Principle of Human Social Behavior. A section on “hooks” in At the Crest of the Tidal Wave anticipated the unyielding faith in the Fed’s ability to bring back the bubble. “Hooks are conditions at important turning points that command investors’ focus and force them to conclude that a reversal is impossible.” At the Crest also noted that when the market is after a really big fish like the one it has been reeling in since the a-d line peak in April 1998, it uses a really big hook. As Paul Montgomery (Universal Economics, 757-873-3300), points out in his January 1 letter, the near universal esteem toward the Fed is the opposite of the populist ire the Fed faced in the wake of the 1980 bottom for stocks. Montgomery dates the high in antipathy toward the Fed as December 7, 1981 when a distraught man entered the confines of the central bank with a sawed-off shotgun. According to one account, the assault finally convinced Paul Volcker that a full-time bodyguard was a good idea. “Clearly, the Fed chairman has transmuted from a hated devil to be taken at gunpoint to the Giver of all Good Gifts,” notes Montgomery, as today, the “depth and pervasiveness of Greenspan worship is unprecedented.” Maestro: Greenspan’s Fed and the American Boom is a current best seller now being marketed as the story of “the real president of the United States.” According to Montgomery’s best seller indicator, the book is at a major sell signal; its idolatrous tone marks a positive extreme for the Fed, the boom it symbolizes and its mythological power over the market. The divide between the Fed chairman’s popularity and central banks’ historic post-mania impotence is a recipe for grand disappointment. Look for his image to fall hard. The first hints of trouble should show as soon as the Fed-induced buying frenzy of January 3 subsides and the bear goes back to work.

To: Les H who wrote (71556)	2/25/2001 2:31:23 PM
From: UnBelievable	Respond to of 436258

When Pressed I Wonder What Any Time Soon Means. Also they fail to mention what happens after the "spirited bear market rally'. And I'm sure when it occurs they will tell us when it is over.

To: Les H who wrote (71556)	2/25/2001 2:55:19 PM
From: UnBelievable	Respond to of 436258

AG's Response To The Bear Stearns Report When AG has wanted to communicate unofficially it usually has been through The Washington Post's Berry, and never has been through a Brokerage Firm or Analyst. BASIS POINTS By John Berry The Washington Post - Sunday, February 25, 2001 The recent plunge in consumer confidence and stock prices has some analysts suggesting the Federal Reserve might not wait until its next policymaking session March 20 to cut interest rates by another 50 basis points. It cut rates that amount in a between-meetings move Jan. 3, and then again at a meeting Jan. 31. The economy is still at serious risk, but there are some positive signs as well, such as a very rapid reduction in business inventories and a healthy housing market. The Fed would act in response to a clear new threat to economic growth; absent such a threat, however, officials much prefer to change their interest rate target only at meetings of the Federal Open Market Committee. That is a more orderly process that allows investors to anticipate what the Fed is likely to do -- and when they are likely to do it. That thinking doesn't rule out a move, but with only three weeks to the next meeting, it makes one unlikely. Perhaps Fed Chairman Alan Greenspan will provide some clues when he testifies before the House Financial Services Committee on Wednesday. washingtonpost.com