A cut in rates usually signals that the worst is over and the future is brighter as economic growth accelerates and produces increasing corporate earnings. Remember, it's all about earnings. The resolution of the election has helped to reduce market uncertainty, but it will not prevent a recession. Consequently, I believe the next leg-up will probably not begin until the Fed cuts interest rates. After a cut in interest rates, the market should rebound strongly to new highs during 2001 due to the abundance of money.
Money fuels the economy and stock prices in the same manner that gasoline fuels an automobile.
Take your foot off the accelerator and your automobile slows down. When Mr. Greenspan slows money growth, the economy slows and corporate earnings are also reduced. With that basic understanding of how important money is to the economy, earnings, and our investment success, let's review the five enormous faucets of money that will drive the market to relentless new highs over the next few years. The Federal Reserve's power to control the rate of M3 money supply growth and the expansion of credit is enormous. Never be against the Fed.