Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Sam Citron who wrote (57204)	12/11/2001 5:59:47 PM
From: Jacob Snyder	Read Replies (2) \| Respond to of 70976

Yeah, they now have only 1.75% of leverage left. I agree, one more 0.25 cut at the next meeting, and that's probably it (barring more political/military unpleasantness, and not too many more large cap companies/countries going under/defaulting). Then, we spend all of 2002 guessing when the Fed starts taking it back. The pattern is, the Fed keeps lowering until just after the unemployment rate peaks. They can't do that this time, as they have "front-loaded" the rate cuts in this recession; little ammunition is left. However, I doubt they start raising rates until roughly 3 months after unemployment peaks. If business fundamentals trough in about March 2002, unemployment should peak about 6 months later (=September 2002), the Fed starts raising in December 2002, I sell all in January 2003 (everything I bought in October 2001). The third Fed rate hike happens in June 2003, and stocks trough in October 2003 (and I load up again). By this tightly scripted guesswork, the peak is early 2003 (Nas 2500-3000), and the trough is late 2003 (Nas 1000-1400). All guesswork, of course, any of these various time lengths could easily be half or twice what I'm guessing. But I don't think we get a trough in stocks in October 2002, unless the Fed rate cuts don't work, the economy stays in recession, and everyone is believing that we're going the way Japan has. We should know by June 2002, if the rate cuts are going to work. If it's inflation fears and Fed rate cuts that causes the next trough in stocks, it'll take longer till the third rate hike happens, my guess is well into 2003.