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Strategies & Market Trends : New US Economy Policy
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To: Arthur Tang who wrote (149)4/27/1998 2:46:00 PM
From: Arthur Tang  Read Replies (1) of 435
 
The new economy and rumours of interest rate increase?

Rumours were started at CNBC early in the morning by asking all the guests, what they think of the interest rate increase that Feds will be doing. About 10:30am; a run on the Dow and the Nasdaq begin(down 150 then 207). Then Allan Murray of Wall street journal started the definitive conclusion that Feds will raised interest rate based on his friend Dave, a journalist at Wall street who profess to know Greenspan and his gang. Dave is suppose to be in the know? I thought only Salomon bros. people knew. Now only Goldman, Sachs people know. Because they handle the auction preview for FEDS. They are the only ones know about the rates that the Japanese will buy. Traditionally, the overnight discount rates follow the bond auction prices, going up and coming down.

What rumour will do is creating a crash. Rumours can never move the price of indexes up, that takes money. Crash is easy, just a run on the specialists. What FEDS have to do is to dispute the rumours; until they are ready to act. Any rumours will take away the power of the FEDS to act; when they want to.

Foolishness will happen but FEDS have to be responsible. A rumour is not FEDS' policy; and can never be.
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