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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Wally Mastroly who wrote (1069)	4/20/2001 4:49:50 PM
From: Wally Mastroly	Respond to of 10065

Greenspan & you-Falling interest rates help more than just the stock market: cnnfn.cnn.com

To: Wally Mastroly who wrote (1069)	4/21/2001 10:34:03 PM
From: MrGreenJeans	Read Replies (3) \| Respond to of 10065

Wally As Brinker has pointed out occassionally, what is going to make the consumer spending (& business capital spending) increase to point of more significant economy growth? Lower interest rates will have their effect first in the automobile and housing sectors. CFO John Devine of GM has stated that consumer demand for automobiles has been stronger than anticipated. I have looked at a couple of more professional forecasts for the automobile industry for 2001 and both seem to agree that this year's sales will be the second best on record. The lower rates will keep the housing market / refinancing market hot if job declines are not severe. The FED is increasing liquidity & lowering short-term rates...but, what will increase confidence enough for the consumer/business to start taking advantage of it? on the other hand, I've read that a number of banks are tightening credit requirements. The continuous litany-of-layoff announcements will not instill confidence in buyers. It does not seem to me that consumer spending is falling off a cliff as news reports suggest. In fact the industrial output number increased .4% in the most recent monthly report. The report reflected the increase in automobile sales. Why is that important? Because even with the rebates car manufacturers are offering it is still a major purchase for most people. Someone out there is still spending. Further, the unemployment is still historically low and unemployment is a lagging not leading indicator. You can lead a horse to water, but can you make him drink? - Or as Brinker might say, the FED lowering rates could be like pushing on a rope (i.e., if there is no significant use of the lower cost of borrowing) I think BB will be changing his mind about this once he looks closely at the numbers. It fits his MOBAO scenario. What it does not fit is what is actually happening in the past couple of months. I think his thinking is changing at least that is what the newsletter is indicating.