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Dear M.Simms
My perspective is cyclical. (Business cycle) I am looking for signs of a major
bottom. The reserves figure is a straw in the wind of evidence in that
direction. Many other signs are hinting major stock bottom.
Very high volume on the decline.(For sure the public was not buying.)
Sentiment is shifting to the negative.
Long term rates are in decline especially if they follow short rates which is a
reasonable likelyhood.
If I was a bull, the long term charts of the individual DOW stocks look very
bullish to me. Major base formations or terminal shakeouts.
None of these indications say long term buy yet clearly, but one must look for
them. I can not eliminate the possibility that we may have already put in a DOW
long term bottom.
If the FED figures on money are correct, and they may be wrong or a fluke, we
are seeing major FED stimulus. That stimulation has a powerful impact on bonds
and then stocks.
I was suggesting that we may be shifting in FED policy from restrictive to
stimulative. In other words I tend to believe that despite declining rates that
FED policy has been restrictive up to this point. I think, without checking the
figures that there was a similar shift in FED policy the day after the 1987
crash.
Regards,
Stuart
"M. Simms" wrote:
> Be careful with your correlations....
> the stock market is NOT the economy.....
> the market will go where it wants......look at yesterday (Wed) !!
>
> Definition of an oversold market:
> when one tiny, tiny piece of good news results in a fantastic move up...
> most likely a "c" wave in Elliott parlance.
>
> > -----Original Message-----
> > From: STUART AUSLANDER [mailto:u.stuart-auslander@xxxxxxx]
> > Sent: Wednesday, October 03, 2001 4:35 PM
> > To: M. Simms
> > Subject: [Fwd: [Fwd: [RT] Adjusted Reserves Sept 19, 2001]]
> >
> >
> > I see it as you do. I just dont know if we are right, and what
> > the stockmarket
> > implications are.
> > Thanks for the reply.
> > Stuart
> >
> > "M. Simms" wrote:
> >
> > > They'll need more than a sledgehammer to force the banks to loan in this
> > > climate....
> > > major magazines bankrupt, all 'net hosting services going
> > bankrupt (PSINet,
> > > Exodus, Excite@xxxx), internet consultants and developers - all going
> > > bankrupt.
> > >
> > > remember, Japan is hurting and interest rates are zero there.
> > Now they are
> > > waiting for negative interest rates....hmmm....how does that
> > work again ?
> > >
> > > The Fed's "rudder" is broken.......the next sound you'll hear is the
> > > explosion of cash from major banks as they attempt to squeeze
> > it into their
> > > all-ready-full vaults.
> > >
> > > > -----Original Message-----
> > > > From: Timothy Morge [mailto:tmorge@xxxxxxxxxxxxxxx]
> > > > Sent: Tuesday, October 02, 2001 12:23 AM
> > > > To: realtraders@xxxxxxxxxxxxxxx
> > > > Subject: Re: [Fwd: [RT] Adjusted Reserves Sept 19, 2001]
> > > >
> > > >
> > > > Stuart:
> > > >
> > > > Actually, in situations like this, the Fed has a great tool--they
> > > > call the
> > > > main players at major money center banks and tell them to loan
> > > > aggressively. It isn't a tool they use often, but when they
> > do call, the
> > > > major players listen, because the tool can work both ways. You
> > > > may need the
> > > > Fed to help you on a short reserve day or with a major problem,
> > > > so it pays
> > > > to listen, especially because all of your peers will be
> > getting the same
> > > > call and the same cheap money.
> > > >
> > > > That doesn't mean the Fed will have an easy time of it. They know
> > > > they are
> > > > pushing a wet noodle. It just means that they will use tactics they
> > > > normally wouldn't take out of their tool box.
> > > >
> > > > Best,
> > > >
> > > > Tim Morge
> > > > Blackthorne Capital
> > > >
> > > >
> > > > At 11:14 PM 10/1/2001 -0400, you wrote:
> > > > >Bruce
> > > > >Does that mean money is tight now in the USA because comercial
> > > > and industrial
> > > > >loans are crashing along with commercial paper.
> > > > >Stuart
> > > > >
> > > > >bruce.larson@xxxxxxxxxxxxx wrote:
> > > > >
> > > > > > The Fed injects liquidity by buying back mainly short
> > treasuries. So
> > > > > > now the banks are sitting on alot of cash. The only way this is
> > > > > > distributed through the system is if the banks are willing to lend
> > > > > > this excess cash out and if borrowers see leveraged investment
> > > > > > possibilites. Japan loosened in the 90s but it didn't do the
> > > > > > domestic economy any good because domestic borrowers were
> > perceived
> > > > > > uncreditworthy. I'm sure the borrowers and investors were already
> > > > > > drowning in a tide of debt and stock market losses. Initally the
> > > > > > liquidity went offshore to Southeast Asian ventures which
> > pretty much
> > > > > > all bit the dust. Now all the money is parked in long Japanese
> > > > > > government bonds which last time I looked yielded about
> > 1.4%. Who in
> > > > > > their right mind would buy long-term debt in the world's most
> > > > > > indebted nation suffering through a severe recession and doing
> > > > > > everything it can to weaken its own currency? Better off putting
> > > > > > your money under a mattress.
> > > > > >
> > > > > > --- In realtraders@xxxx, profitok <profitok@xxxx> wrote:
> > > > > > > Hello
> > > > > > > Attach is the latest m3 money supply as reported by the fed
> > > > > > > ----- Original Message -----
> > > > > > > From: "STUART AUSLANDER" <u.stuart-auslander@xxxx>
> > > > > > > To: <realtraders@xxxx>
> > > > > > > Sent: Monday, October 01, 2001 10:05 PM
> > > > > > > Subject: [RT] Adjusted Reserves Sept 19, 2001
> > > > > > >
> > > > > > >
> > > > > > > > Adjusted reserves of the banking system which have
> > varied from 60
> > > > > > to 70
> > > > > > > > billion for the last 3 years(except during Y2K) grew
> > from 68 bil
> > > > > > on
> > > > > > > > September 5 to 107
> > > > > > > > billion on September 19. (These are the Fed StLouis
> > measures of
> > > > > > the
> > > > > > > > required reserves need by the banking system to support their
> > > > > > > > deposits.) I would say the FED has taken out all the
> > stops and
> > > > > > intends
> > > > > > > > to dramatically stimulate the economy with money.
> > > > > > > >
> > > > > > > > It is my feeling (I would love feedback on this) that
> > money has
> > > > > > been
> > > > > > > > tight despite declining interest rates. Declining
> > interest rates
> > > > > > do not
> > > > > > > > necessarily make money loose. I suspect we have just
> > seen a major
> > > > > > > > change in FED policy.
> > > > > > > >
> > > > > > > >
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