VOLTAIRE'S PORCH-MODERATED Message Board

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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED

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To: djia101362 who wrote (31620)	2/21/2001 8:48:03 PM
From: KyrosL	Read Replies (3) of 65232

What makes you think that an unscheduled .50 rate cut will help the market? The last two .50 cuts, one of them unexpected, did not help much. A rate cut before the regular March meeting may actually hurt stocks. Given the ugliness of the latest PPI and CPI numbers, markets may conclude that the Fed does not care about inflation. The resulting Fed credibility loss may prove deadly for the dollar as well as US bonds and stocks. And it's not just US investors we need to worry about. Foreigners hold 40% of US treasury bonds, 20% of US corporate bonds and some 10% of US stocks. They can easily tank our markets, if they decide to sell. It's hard being a debtor nation. We are increasingly depending on the kindness of friends and strangers.

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