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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Ron Bower who wrote (8358)	3/20/1999 2:23:00 PM
From: Sam	Respond to of 9980

Ron, << ''There is a reasonably strong chance that it could invite the Federal Reserve to take back one of the reductions in interest rates that it made last year,'' he said. And as the Wall Street saying goes: Bull markets don't die of old age. They are slaughtered by Fed rate hikes.>> Even if oil prices go up, the Fed still won't "have" to tighten. Real rates are extraordinarily high right now. The bond market itself will take care of inflation problems by going lower, making it more expensive for people to get financing. Stocks will probably tank for awhile as well, a la last summer/fall, but Uncle Al (or someone) will be there to help if things start to look too bad. That sounds complacent (the Mother of all Evil) even to me, but I still don't see the end of this economy without a serious "external" (i.e., political) disruption, and oil prices rising because of an agreement among producers (as opposed to, for example because of a drawn-out war in the mideast, or serious terrorist sabotage of several important pipelines at once) doesn't qualify. They'll stick to what they agreed to for awhile, then someone will cheat, because they "need" the money. Or Iraq will suddenly be able to export more oil for "humanitarian" purposes. Or demand will ease because they cut too much off. The capacity is there, it will get used one way or another.

To: Ron Bower who wrote (8358)	3/20/1999 5:24:00 PM
From: Dayuhan	Read Replies (2) \| Respond to of 9980

I've long thought it inevitable that oil prices would start to cycle up again. Does cause inflation worries, but there are bright sides on the macro and micro levels. Oil producers will spend the money they earn, adding to aggregate demand. It will also be good news for the oil-service sector, one of the best values in the stock market today. I've been picking some of these up over the last few months, partly because the fundamental numbers are so good and partly because I want to be smiling when everybody starts howling over rising oil prices. Interesting to see if the producers can stay together.