MDA - Market Direction Analysis Message Board

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Strategies & Market Trends : MDA - Market Direction Analysis

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Nov 21 4:00 PM EST

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To: dennis michael patterson who wrote (28241)	10/3/1999 10:12:00 AM
From: JDinBaltimore	Read Replies (2) of 99985

THE FED WILL TIGHTEN! THE FED WILL NOT TIGHTEN! Who Cares? These threads are so pre-occupied with the guess of yea or nea. The FED does not control Interest Rates - On a Macro Level, Financial Markets will Determine Rates. Look at bond prices over the last few weeks. Did the FED have anything to do with the increase in yields? NO! They are market driven! Economics 101 risk /reward what rate of return is required to attract investment. The higher the risk - the higher the required return. This is basic stuff. The FED in my opinion is just like any other corporation competing for funds. They lag the markets the real rate of return has been calculated into the financial markets months ago. The markets are now telling the "High Fliers" internuts - nifty fifty - hey, the price to play is going up. Don't discount the power of that yellow stuff, it's a crap shoot but right now it is having a serious look by serious money! One more player that can attract investment from a fixed pool. The odds are heavily weighted against raising. But if gold remains strong, and all indications point to that. Yields on bonds will have to increase, funds will flow from the markets to gold and bonds, and there you have a higher cost of capital with no FED intervention. Then the FED has to come back in the next round and raise to attract funds. Down and Down it goes until evaluations once again determine the risk / reward on the markets are acceptable. Sorry for the brutally basic economic rhetoric. JDinBaltimore

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