MSN has caught me completely by surprise. Usually, while the WSJ and CNBC are blowing productivity and GDP sunshine up everyone's ass, CBS Marketwatch remains the model of pragmatism among major financial news outlets. Today, MoneyCentral at MSN has run an article about how an analyst, one Michael Belkin, who has been right about everything so far has now decided that the market will turn down...severely.
First, Mr. Belkin got the following right:
If his clients followed this advice, they'd have done very well indeed. He fully recognizes the liquidity bubble and says that it's now ending since the Fed has stopped pumping up the money supply. I do look at the weekly money supply numbers, and this is true. It's the quietest way for them to turn down the liquidity spigot. Surprisingly little of the media pay any attention at all to the weekly Mn numbers, but an interest rate change after an FOMC meeting is huge news.
What's he see coming for the future?
Belkin believes that the Bush administration essentially “rented the 2003 recovery from Wal-Mart (WMT, news, msgs)” by cutting taxes and mailing out rebate checks, and now faces an “involuntary deleveraging process” that will feed into weaker corporate results, softer economic statistics, worsening unemployment and, eventually, a sharp decline in real-estate values.
Only time will tell if Belkin or the rectal-sunshine-blowers are the ones who were right.
Posted by nicole at November 06, 2003 12:27 PM>In mid-1999, he noted that the Federal Reserve had >printed so many dollars in expectation of Y2K bank >runs that the excess money would cause a stock >market boom.
On a tangent to this, how does printing more money increase the money supply? I thought that you increased the money supply by lowering the interest rate for banks to borrow from the Federal Reserve. I assumed that bills represented only a fraction of the total money supply. Most money is electronic bits.
I remember Y2K. The US Mint was in the midst of a change over in the design of bills. Almost all of the $100 and $50 bills had been exchanged by then, but it seem to me that they were worried about the run on banks, and left the old $20 in circulation. I assumed this was in anticipation of everyone wanting a few hundred dollars in small bills handy so they would be covered when the ATM’s stopped working.