The market is up another 260. Do the guys on Wall Street know something we don't or are they having one last fling before everyone bails out?

-- fatanddumb (fatdumb@nd.happy), December 03, 1999

Answers

That's actually a good question. This is an area where I am would be considered "ignorant". Any analysts out there care to comment on whats going on with the stock market? Suggestions? Opinions?

-- Familyman (prepare@home.com), December 03, 1999.

the "street" is being driven by greed right now. professional investors are driving it. they have put their faith in optimistic y2k spins coming out from everyone supposily in the know. this will only make the fall harder once we move into the new year

-- charlie h (choke@bloomberg.net), December 03, 1999.

http://nypostonline.com/business/18993.htm

Link

THE FED IS PARANOID ABOUT Y2K

By JOHN CRUDELE

THE Federal Reserve is being driven to distraction by Y2K.

Even as the Central Bank has been publicly tightening monetary conditions through three interest rate hikes this year, it has been quietly pumping money galore just in case the Millennium madness being predicted actually does happen.

Michael Belkin, a Fed expert who writes the Belkin Report, says Alan Greenspan has allowed $70 billion in cash to flood the U.S. monetary system in recent weeks and has created something called a "repo option." These options could leave the monetary system awash in another $426 billion in additional emergency cash in the next few weeks.

"This all adds up to the biggest Fed credit expansion ever. This monetary boost is wildly stimulative for the U.S. equity market in the short term," Belkin says, "but will leave equities painfully vulnerable to a crash once the Y2K-related credit expansion is withdrawn in the new year."

In recent weeks the Fed has allowed the nation's money supply to soar and has liberalized collateral requirements for government securities dealers doing business with the Fed.

Last week alone, the government's M-3 money supply figure rose at an annual growth rate of 12 percent. That's more than double the normal growth and far above what the Fed would generally allow.

But the repo options, which were first sold on Oct. 20, are the thing that could pump more money into the nation's monetary system the quickest.

Financial insitutions that buy these options can convert them quickly to cash in a pinch.

Ironically, this liquidity burst comes at a time when the Fed is pretending to be very stingy. The third rate hike of the year that came a couple of weeks ago was billed as the Central Bank's "get- tough policy."

By the Y2K actions really means that the Fed isn't the Scrooge Wall Street fears but really a very generous Santa. And a Santa who's petrified about the New Year consequences.

What the Fed has been doing could help stocks rise nicely over the short term. As I've already said, there are only a few hurdles that could get in the way of bigger bubbles by year end.

But the Fed's generosity in itself could be a big long-term problem for the financial markets.

The bond market would normally rally if it thought the Fed was being diligent in fighting inflation. And that's precisely the message that the three rate hikes should have conveyed.

But bonds have, instead, been very weak despite the Fed's supposed nastiness and rates have risen beyond where the Fed intended.

And that is leading many to believe that investors worldwide are wise to the Fed's Santa Claus ruse.

That's also why the U.S. dollar has been so weak. And why, traders say, the Fed was forced to rig the bond market last week with massive purchases of all maturities of government securities.

The prognosis? The stock market should have a very easy time between now and year's end -- even easier than I first thought.

But there could be trouble later when word gets around about the Fed's dirty little secret -- so don't go spreading this around.

-- (just@helping.out), December 03, 1999.

Thursday December 2: New York Stock Exchange 50 new highs 245 new lows Record divergence between average stock (down 20% from April 1998 peak = stealth bear market) and the Dow 30 Industrials setting new records. There was a two year divergence before the 1929 Crash and a long-term "Nifty-50" divergence before the big 1973-4 bear market.

Bear markets, however, rarely start unless a recession is on the way. So far no indicators of a recession (of course whether Y2K would cause a recession is a complete mystery). Economists like to say 'the stock market has predicted nine of the last five recessions'. Economists, however, have predicted zero of the last five recessions.

-- Richard Greene (rgreene2@ford.com), December 03, 1999.

An old stockmarket cliche',"Never fight the tape".You can listen to smart people out of their specialty and lose your shirt.Ala North,Yourdon,Lord,Hyatt,etc, etc.Be your own man/woman,talk to experts in their field.It's a free country.If you want to believe that everything is spin,so be it,but at least apply that same parameter to everybody else that you listen to.As for me,I just cashed out of the market with an $8234.00 gain.I'm off to buy more beans and rice.Sorry Goldbugs,gold down another $3.00 or $4.00. Maybe Gary North will explain what is happening.BTW, why is he silent on this? Well, the car should be warm now,so its off to the mall. Best to you.

-- happy (im@themarket.com), December 03, 1999.

There seems to be a strange viewpoint emerging on this forum regarding precious metals and Y2K: That including gold and silver coins as part of one's Y2K preparations is done as an "investment" that should be reaping rich financial rewards in 1999. Further, that one can compare this directly with one who invests in the stock market.

I think that it is a fair to say that one buys gold and silver coins in 1999 to protect one's money as a hedge for what may happen in 2000. That is radically different from making an investment intended to "grow" one's money.

Obviously, there are "goldbugs" that try to do just that with gold, including gold stocks, e-gold, etc. But I would not consider that to be very pertinent to Y2K preparation as most would define it. (It would be equivalent to paying for a year's supply of stored food, but never actually having physical possession of it, instead depending on someone else keeping it for you. Not a real good idea.)

28 days.

Y2K CANNOT BE FIXED!

-- Jack (jsprat@eld.~net), December 03, 1999.

According to Reuters...

Stocks Soar on Jobs News,

"Stocks were in orbit at midday on Friday after blasting off on a key jobs report that showed no signs of wage inflation. The rally placed the three major stock indices at or near record levels.

'It is the Goldilocks picture,' said Pierre Ellis, senior economist at Primark Decision Economics. 'There is strong growth without inflation.'

The Dow Jones industrial average rose 265 points, or 2.40 percent, to 11,304, putting the index within striking distance of its record close of 11,326.04 set on Aug. 25. It traded briefly as high as 11,341.

The New York Stock Exchange said it imposed trading curbs at mid- morning when the marquee index soared 210 points.

The Standard & Poor's 500 index, a broader stocks yardstick, jumped 32 points, or 2.31 percent, to 1,441, putting it above its Nov. 18 record close of 1,424.94.

The technology-heavy Nasdaq composite index rocketed 77 points, or 2.23 percent to 3,529 after soaring to another high at Thursday's close.

The broad-based rally was set off by a U.S. Labor Department report that November hourly wages rose by a less-than-expected 0.1 percent, or 2 cents. Economists polled by Reuters had expected a 0.3 percent increase..."

-- (pshannon@inch.com), December 03, 1999.

"Thursday December 2: New York Stock Exchange 50 new highs 245 new lows Record divergence between average stock (down 20% from April 1998 peak = stealth bear market) and the Dow 30 Industrials setting new records. There was a two year divergence before the 1929 Crash and a long-term "Nifty-50" divergence before the big 1973-4 bear market"

IMHO,

The market is being propped up. The collapse you all are looking for is not far away. Not only is the NewHighs/NewLows ratio pathetic but the Advance/Decline Line is real negative also. In other words, most folks are losing money in this market if they are not trading in and out. Many longterm investors are losing here.

Daytraders at this point might be better termed Minutetraders. The Daytraders will lose if, but more like when the liquidity drops off.

This is scary stuff.

-- the Virginian (1@1.com), December 03, 1999.