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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 334.92+1.5%Nov 10 4:00 PM EST
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To: Wally Mastroly who wrote (835)3/20/2001 7:39:41 PM
From: MrGreenJeans  Read Replies (1) of 10065
 
Wally

The Federal Reserve made a misstep today that will have to be corrected between meetings in April. As I have stated over the years there is a conversation taking place between the Federal Reserve and Wall Street which you can read daily in the Wall Street Journal and which is reflected in the movements of various financial markets. Today's equity move down reflects the fact that the Federal Reserve is behind the curve. The Federal Funds Rate is still above the ten-year bond rate, the market rate, at a time when inflation is not a concern. The Federal Reserve cuts 1/2 a point when market participants are clamoring for a 3/4 point cut. Then coincident with the 1/2 point cut the Federal Reserve writes they are concerned about falling stock prices as it effects consumption. If the Fed was so concerned about this relation they should have cut 3/4 of a point at a minimum; this decrease should have been given far more thought. Well, they should be more concerned tonight about confidence and consumption because many businesses and many investors expected more forceful action than a 1/2 point cut. Further, if they are going to cut between meetings in two or four weeks why not cut more forcefully now? What is the point of waiting? It just erodes confidence. It just adds to the instability. It just adds to the uncertainty and volatility.

Alan, you made a mistake today and you need to address it quickly.

P.S. Thanks for the rate cut because any cut is better than no cut at this point.
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