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Biotech / Medical : Biotech Valuation
CRSP 53.85-4.5%Jan 9 9:30 AM EST
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To: Biomaven who wrote (7036)9/5/2002 9:30:47 AM
From: IRWIN JAMES FRANKEL  Read Replies (1) of 52153
 
Hi Peter,

"I think we're close to the dreaded "pushing on a string" phenomenon with interest rates. I'm not sure that another 1/2 point cut in the Fed Funds rate would really do very much, other than perhaps psychologically."

It is hard to know whether you are right. But even if you are - it is not sufficient reason not to cut the short end. We need to try and see if we are pushing on that string. If the economy is that bad it is proof that the Fed is too far behind the curve.

"The long rate didn't respond at all to most of the short-term rate cuts - it is now responding primarily to the weakness in the economy."

I disagree with you on that statement. Long rates responded exactly as they should - they dropped but more slowly than the short end leading to a steeper yield curve.

Now that the Fed is failing to adequately stimulate the short end - the market is flattening the YC.

Respectfully submitted,

ij
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