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

To: bumboo who wrote (71585)	3/9/2001 7:17:04 PM
From: Wayners	Read Replies (3) \| Respond to of 99985

Yea there's no guarantee that the lower rates will turn the market but if history is any indicator its worked 13 out of 14 times. In the 1929 to 1932 timespan it didn't work. The economist had a good article that might explain why. Their argument was that in inventory correction cycles, the Fed always works. In asset inflation bubbles, the Fed doesn't work. Could be an important point of difference. The rule on rate cuts is 2 tumbles and a jump. I thought it was 3 tumbles and jump but went back and dusted off the old STock market logic book by fosbach and saw it was actually 2. Historically after two drops, the market has nearly always been up off the last rate cut levels 18 months later. I also think the Fed follows the 30 Year bond yields in setting fed funds rate targets. It doesn't matter what today's employment report was today unless bonds sold off dramatically. I didn't get a quote but unless bond yields moved up to 6% today, Greenie has the Fed Funds target rate higher than the 30 year bond yield in the face of 0% GDP growth. Thats an auto rate cut. To get the Fed Funds rate just back to being normal would require him to cut it another 125 basis points. To get stimulus he's got to get it a lot lower than that---like 2% to 3%. Employment is a lagging indicator. To show how amateurish CNBC is, Kathleen Hayes this morning was asking guests if they thought employment was a lagging indicator because she didn't know. Pretty bad when the "bond lady" doesn't know some basic economics. I'm not making the above arguments to call a bottom, but I think its foolish to fight the Fed here by selling out positions and shorting etc.