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[RT] FW: Hard or Soft Landing is beside the point



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Speaking of manipulation accusations - the gold market isn't the only
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JW

-----Original Message-----
From: James Smith [mailto:JSmith@xxxxxxxxxxxxxxxxx]
Sent: Wednesday, June 07, 2000 8:45 PM
Subject: Hard or Soft Landing is beside the point


The argument over whether the economy will have
a hard or soft landing overlooks an important
point:  The economy is not the same thing as the
stock market.  You can have a "soft landing"
for the economy and  still have a "hard landing" for
stock market speculators.   (Does Oct '87 ring
a bell...the stock market sold off, but the economy
kept on humming like the everyready bunny).

Speculators miss this point because they think
Greenspan is targeting the economy....wrong!
Greenspan is targeting the stock market.  If
tech stocks rallied 20% in one week, do you
honestly believe it  escaped the FED's attention??

Greenspan will never admit that he is targeting
the stock market, but he is.  Many people believe
that Friday's PPI is going to determine the fate of
the stock market.  Quite simply, they're wrong.

This doesn't mean the adminstration won't do
everthing possible to fiddle the numbers.
This adminstration has made clear that they
see no  great moral problems in manipulating
the economy for short-term political gain.
The Treasury Deparment was more
than happy to manipulate the yield curve to
bring down longterm rates.  If govt will not
shy away from manipulating the yield curve,
will they shy away from fiddling govt statistics?

 Both CPI and PPI have been and will
continue to be manipulated.  Do you honestly
believe its only the Japanese who fiddle the
numbers??   (The Japanese were recently
caught out fiddling their GDP growth figures)

Only a rabid nationalist or a naive investor
 would believe that his own government would
 not stoop to such low-life tactics.  Look at the
 games Europe played with their debt to GDP
 figures so that Italy and other countries could meet the
requirements to enter the EURO.

They are all politicians and that makes them liars
by definition.

Getting back to the point, if PPI comes in lower
than expected, stocks may rally, but the FED
will not allow a stock market rally to gain too
much momentum.  In fact, any rally is likely to
give way rather quickly to more "scare tactics"
from the FED.

Fed governor Meyers just stated in the press,
that Inflation is picking up. Do you really believe
the timing of Meyers' comments is an accident?
Meyers' comments are meant to throw cold water
on this rally before it gains too much momnentum.
If Meyers' comments fail to cool the market
because the administration decides to manipulate
the May PPI numbers, it will be self-defeating...
because the FED will be all the more likely to
raise rates.

In February Greenspan came as close as he
will ever come to admitting that he is targeting
the stock market.  If you remember, that's when
he came out saying that "productivity can cause
inflation."    I happen to agree with him on this
point, but many analysts were quite alarmed
at the turn in Greenspan's thinking.   Greenspan
was worried that the investors were discounting
higher productivity into their expectations on
the economy and the stock market.   Discounting
ever higher notions of productivity into tech
stocks was leading to a bubble....which has now
burst.  I highly doubt that Greenspan will allow
this bubble to come back any time soon....no
matter how much the administration needs it to
help Gore and the democrats get elected.

"It's the economy stupid."

 What Clinton was really saying is that if you can
 manipulate the economy and the stock market
 going  into the  election, you can win every time
 no matter how cheesey you are as a politician.

 So far he has not been proven wrong.

But there is such a thing as cycles and
market manipulations do not banish the law
of cycles.  A cycle can be extended, but at
the cost of higher volatility going forward.

Speaking of "volatility", this week is a
"Panic Cycle Week" for the Nasdaq.

Panic Cycles do not predict which way the
market will go, but they often show volatility
in both directions.  A market that rallies
strongly into a "Panic Cycle Week" has
a higher probability of selling off coming
out of it.