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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Diana who wrote (4159)	6/26/2001 10:34:38 AM
From: Hawkmoon	Respond to of 33421

That would be a major mind-shift and would cause real angst. Not only here, but in every industrialized nation on the planet. You can't have 33% of the global GDP going into recession without some major international repercussions. But because the US economy is in better fundamental shape than it's competitors, we have the leeway to engage in significant economic "pump priming". An advantage that Japan and Europe do not possess.

To: Diana who wrote (4159)	6/27/2001 12:09:55 AM
From: John Pitera	Read Replies (2) \| Respond to of 33421

the real turning point will be the concern that the Fed cannot lower enough to spur the US out of its profits recession. . . that Greenspan cannot control this slowdown/recession. That would be a major mind-shift and would cause real angst. Hi Diana, that is an excellent point and I think that is why the FED has been so aggressively easing since Jan 3rd, compared with the Monetary easings that occurred in the 1990-1992 period where we saw many .25 basis point cuts in the Federal Funds rate and only one or two .50 point cuts. The Fed did not perceive us being in the unwinding of a speculative bubble, certainly not of this magnitude back then. If They do not aggressivelyFront Load the Easing Process, the thought is that they may not be able to pull us out of a "Virtueless Cycle of Collapsing Prices" And if you look at stock valuation metrics, such as PE ratio's , Price to sales, Dividend Yield, Replacement costs, and Return on Equity, we were not in the 2000 era valuations in 1991 by any stretch of the imagination. The thinking is that the Fed is cognizant that a perception may develop that a Global slowdown is not only occurring but is in an accelerating phase and that the Fed and the other Monetary Authorities may not have the tools to combat this trend before a lot of damage is done to the Global Economic and Wealth Environment. John