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Strategies & Market Trends : Three Amigos Stock Thread
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To: James Strauss who wrote (8443)9/7/1998 3:17:00 PM
From: Sergio H  Read Replies (1) of 29382
 
<A picture of where we've been does have an impact on interest rate decisions that helps us try and figure out where we are going... If I were the FED chairman and I saw a declining market and declining world economies that could eventually affect my markets, I'd strongly consider reducing interest rates...>

When we first started our discussion, I posed to you that the current market slide has more to do with profit taking than world economic problems. I also asked you to review our current market conditions, because that is what the Fed must do in determining what the short term interest rate should be. The following measures are reviewed:

The Index of Leading Economic Indicators
Industrial Production
Paper Production
Steel Production
Aluminum Production
Mfg. Capacity Utilization
Construction Spending
Consumer Price Index
Producer Price Index
Unemployment
Treasury Bills, Notes and Bonds
Shearson Bond Index
Fed Funds Rate
The difference between the 90 day T Bill rate and the Federal Discount Rate
M2 Money Supply
Free Reserves held by the banking system

Which one of these measures is forecasting that we need to lower interest rates now ? If you review the stats you would come to the same conclusion. We won't be solving the problems in Asia by lowering our short term interest rates and our economy does not need
the rate cut.

Sergio
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