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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures

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To: Gersh Avery who wrote (15687)	2/17/1999 4:36:00 PM
From: Kailash	Read Replies (1) of 44573

Gersh - since you're the reputed specialist on the Fed's strategies for moderating liquidity, maybe you could explain what's going on. Are market drops reliably correlated with the Fed draining? Are these sums (a single day of adding/draining) significant in real terms, or only as a signal? Does the Fed use the adding to and draining from the banking system reserves as a weak signal of their view of the direction of the money supply, future interest rates, and (for that matter) the valuation of the stock market? You comment on today's action that they added permanent and drained temporarily, but I see only the draining in the release. biz.yahoo.com Thanks for any clarification. This activity doesn't seem to receive much attention from the press but it seems that several times now draining has corresponded with clear down days. Kailash

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