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To: ild who wrote (110869)	6/29/2001 9:47:55 PM
From: ild	Respond to of 436258

comstockfunds.com Fed Easing Near End? No Way! What’s going on at the Fed? The Board’s decision on Wednesday combined with the release of the May 15th meeting minutes indicates that the central bank thinks it is near the end of the easing process. If so, why did some Fed official leak to the Washington Post’s John Berry that the central bank was concerned the interest rate reductions were not working in the usual manner? The minutes do make it clear that there is a split between those who believe the Fed has already done enough and those who think the economy still needs a lot more stimulus. However, the fact that the latter point of view was leaked to the press indicates that the split at the Fed may indeed be quite serious. In any event, we believe that the economy is still not out of the woods, and it will soon be clear that the period of monetary ease is far from over. Recessions occur in response to the excesses of the prior expansion, and do not end until these imbalances are rectified. In the current cycle the imbalances include vast overcapacity in technology, record amounts of consumer and corporate debt, a negative consumer savings rate and a huge trade deficit. Corporations are not going to invest in unnecessary capacity and consumers cannot maintain their pace of consumption without going into even more debt. Consumer confidence is also likely to be negatively impacted by the continuing barrage of layoffs, both tech and non-tech. Yesterday and today alone there were at least 14 new layoff announcements and they show no signs of letting up anytime soon. Last week, according to First Call, consensus estimates for fourth quarter earnings gains were sliced to 6.2% from 7.1%. At that rate of deceleration, final results would show a substantial decline. Our current views may be summed up as follows: 1) earnings are horrendous; 2) the economy is sinking; 3) Europe, Asia and Latin America are in trouble; 4) Greenspan admits the Fed cannot eliminate the business cycle; and 5) stocks are still extremely overvalued. In our view the market started a new downleg in mid-May and will sink to far lower levels.

To: ild who wrote (110869)	6/30/2001 10:37:00 AM
From: JRI	Respond to of 436258

Greenspan is such a hypocrite...the argument a couple years ago was the productivity gains were being led by the massive amounts of technology equipment bought and implemented by corporations (allowing for lower inflation, etc..)..OK, that argument has turned out to be specious (is that the right word?), but let's accept it for now... However, now that tech equipment purchasing growth has stopped dead in its tracks, or even reversed (on a % basis)...that same logic would dictate that productivity growth should be slowing (even severely and should have implications)...allowing Greenspan a lot less leeway (if any) in this pump... Of course, Greenjeans is into free lunchs, and when the argument starts working against you....well, pick another argument or just conveniently forgets the parts of your argument that are breaking down.....