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Strategies & Market Trends : Technical analysis for shorts & longs -- Ignore unavailable to you. Want to Upgrade?

To: Clint E. who wrote (15677)	4/25/1998 1:44:00 PM
From: Temple Williams	Respond to of 68358

Fed tightening a sure bet? Since a lot of people equate the market dropping like a stone with higher rates from the Fed, it's important to note that the Fed has always (in the past 3 decades) tightened whenever financial flows grew faster than fed fund rates. There's a great article in Barron's (04/27/98 issue) on this by Joseph Carson. In February, for the 6th time in 40 years, financial flows grew faster than fed fund rates. Historically, the Fed has tightened within 160-170 days from the crossover. That computes to a July rate hike. But we have, in the Big Green Machine, a "pre-emptive" strike force. So maybe the tightening occurs sooner. Or maybe ... and this is my favorite scenario ... the market thinks the tightening will come in May, tanks a bit (now), gets placated on "no tightening" by Fed pronouncements, recovers (in May) to all-time highs ... and then ... yep ... the Fed tightens (later rather than earlier) and the market blows lunch. Anyway ... the point is that tightening is almost a "sure bet" at this stage ... not "if" but "when" ... and the market probably won't love it a whole lot. My free EWave site is at: skansearch.com