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To: John Hunt who wrote (16850)	10/27/1998 7:59:00 AM
From: John Hunt	of 18056

Fiend Commentary Today - Blatant Manipulation Prior to October 15th, if I was going to give my opinion on whether the Federal Reserve was attempting to manipulate the stock market, I would have answered "it seems plausible." However, after witnessing the Fed's well timed surprise interest rate cut and extremely suspicious S&P 500 futures activity on October 15th my opinion has changed. The Fed's 25 basis point cuts in the Fed Funds rate and discount rate were announced at 3:15 pm after an emergency conference call. It appears very probably that Alan Greenspan was the principal proponent of the rate cuts and the first question that comes to my mind is why announce the move at 3:15 pm instead of waiting until the markets have closed? The only logical answer that I can come up with is that Greenspan wanted to catch the shorts in the worst possible position and at the same time have the bond market closed to avoid any knee-jerk (the bad kind) reactions. This view is supported by the most suspicious S&P 500 futures activity that I have ever seen. In the span of three minutes, S&P 500 futures shot up over 50 points. Of course, if the Fed had made the announcement 20 or 30 minutes earlier the S&P 500 futures would have been limited to a gain of only 27 points before the circuit breakers kicked in. This was apparently not good enough to completely blow out the shorts and create another mini-bubble so the Fed's decision was probably delayed until the limits were doubled. I'm not an advocate of conspiracy theories but it is my opinion that someone (perhaps those that helped bail out Long-Term Capital) had a tip to the Fed's intentions and were ready at the gun to make an outrageous bid on the S&P 500 futures and force the shorts to cover. Not even the hardiest of Bears can withstand a sudden 50 point move against their position and their short covering helped fuel as massive rally that has gotten both Bulls and Bears thinking that the good times are back. In this regard, I have to give Greenspan high marks for orchestrating this maneuver and saving the Bulls from what was likely going to be a grim October. After perusing the various media, it would seem as if he really pushed sentiment back into its exuberant mood with numerous pundits declaring the bear market is over. No doubt, Alan Greenspan is back on many of the Bulls' Christmas lists and I wouldn't be surprised to see him grace the cover of Business Week or NewsWeek very soon. Unfortunately, the short-term pleasure that the rate cuts have given can't completely mask the dire long-term implications of the Fed's blatant manipulation of the stock market. I'll go over some of the implications and also analyze the current "sucker's rally" in Wednesday's commentary. The final results for the poll (331 respondents) asking the question "Is the Federal Reserve and/or Plunge Protection Team manipulating the U.S. stock market?" were: Definitely and blatantly. : 179 It seems plausible given recent actions. : 128 Possible but not very likely. : 11 Highly unlikely. : 8 Not a chance. : 5 I must repeat that the poll is not scientific but it is interesting that over 90% of the respondents feel that it is at least plausible that the Fed is manipulating the stock market. Thanks again to all that responded and the comments presented by several readers were very interesting. The question for the new poll is "Where do you see the price of gold two years from now?" fiendbear.com Me paranoid ... nah! Time for a sticky bun. :-))

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