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Pastimes : From A to Zeev" -- SI Sacks Zeev
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To: Zeev Hed who wrote (506)10/15/1998 11:57:00 PM
From: jbn3  Read Replies (1) of 708
 
Fed lowers rates:

I am very puzzled by the Fed's actions today. Admittedly, I am not a "Fed watcher". Still it seems peculiar to me that the fed lowered the rates

a) without notice, and
b) on the day before options expiration.

The timing thus runs the risk of being perceived as market 'interference'. Mr. Greenspan is a very astute individual. Moreover, he certainly carries no reputation for rashness. On the contrary, every utterance is judiciously weighed. So...

Is the Fed aware of, and trying to head off other hedge fund problems with a bit of mouth-to-mouth on the market? I think it naive to assume that Long Term Capital was the only one in trouble. Are there others in trouble, and how badly?

Is the Fed preparing to ease the debut of the Euro? I think that could be done without a surprise announcement, nor am I sure that the Fed would consider that an appropriate causus.

The timing could hardly have been more optimal to cause a significant bounce in the market, even if it were so intended. Was it?

Was the intention to relieve some pressure on foreign currencies in general and to hasten the growth of foreign economies by repatriating investment money?

Or was the reduction intended to coincide with foreign elections in specific countries where the currency or economic conditions may be weak, such as Brasil?

I find both the action and the timing puzzling, and would welcome others' opinions and thoughts.

regards, jbn3.
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