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Strategies & Market Trends : Asia Forum
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To: Bosco who wrote (6641)9/24/1998 12:06:00 PM
From: Paul Berliner  Read Replies (1) of 9980
 
Zeev, Bosco, I agree wholeheartedly but also take it one step further.
To preface, the market hears what it wants to hear. Every time AG speaks we dissect his ambiguous shpeals in search of what we want to hear. Economists with tightening biases will quote this & that to enforce their beliefs as to what AG really was saying 'between the lines' and likewise those with an easing bais counter with the same.
So yesterday, traders, overwhelmingly sporting an easing bias (or overwhelmingly wishing for an ease) picked out of the speech a line that seems to enforce there expectations: AG said "....... deteriorating foreign economies ...... have increased the possibility that the slowdown in the growth of the American economy will be more than sufficient to hold inflation in check."
If you're in the easing camp, this line looks to be all yours. But those in the tightening camp can also interpret it to mean that no rate HIKE is immediately needed, as the foreign turmoil is equivalent in effect to a tightening.
Thus, after reading the speech in its entirety, I believe that the Fed
will hold rates steady next Tuesday. These guys know that a 1/4 point cut won't do a damn thing for the foreign economies. I also doubt they'd lower by 1/2 point - no way when the main thing holding down inflation is the low commodity prices.
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