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Market Musings, Tuesday May 15, 2001
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Many an Optimist has become Rich by Buying out a Pessimist”
--Robert G. Allen, Multiple Streams of Income
5-15-2001
1:15 AM
On Tuesday the Federal Reserve meets and will announce its decision.. if any on rates….. We feel that the rate move if any is not as important as policy at this point..
A continuation of an accommodating growth bias is warranted and needed in the current economic environment.. ..
I do realize that many analysts and ‘news’ economists are tilting toward a rather meek bias towards growth and a shift towards an anti-inflationary stance by the Fed
Especially with the dramatic move in bonds in the past few sessions..
But I would dismiss those views as rather early and as they are most likely being made by the same fools who could not realize the ‘Fed means business during the rate increases in late 1999 .. and kept their subscribers and readers long stocks especially the technology road builders as they dismissed the Fed rate moves non issue …as they kept
While forgetting that only so many roads can be built before someone has top use them….
It’s obvious now that few traders actually took the recent rate moves this year by the Fed seriously .. if they did there would not be so many people trying to exit the protection of Bonds …which is evident in the last few days.. the excuse being used is inflation worries… which is a standard reason for any sell off in bonds.. but in my opinion.. it’s really not inflation.. it’s just a matter of finally realizing the economy is really not that bad off… …
So now everyone is waiting for the Fed to decide …and the opinions are wide .. no cut.. bearish.. 25 % cut bearish.. 50 % cut bullish… 25 % bullish.. and so on…….I would suggest that the ole copper local will want to keep traders on their toes especially the bears.since the goal of the Fed is to oversee a healthy economy…
So the rate move is not the issue ..but the stance will be …..
In my opinion there is absolutely no reason to adopt a stance towards a risk of inflation..
The Fed will promote growth until it feels the productivity is sufficient to keep the economy rolling without any major obstacles…which should be some time this summer or fall…and if the place is falling apart.. I would suggest the Fed will pump as much money into the system to re-inflate the thing till it stabilizes…….
So what does a trader do…Buy dips.. sell rallies and trade equities from the long side
And try to maintain a long position at all times….…
Happy Trading
Bill
5-15-2001
2:35 AM