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Pastimes : The Justa & Lars Honors Bob Brinker Investment Club -- Ignore unavailable to you. Want to Upgrade?

To: Justa Werkenstiff who wrote (6284)	6/25/1999 10:01:00 PM
From: Ian@SI	Respond to of 15132

Justa, 1. Agree that the probability is that Greenspan will move in 25bp increments. Simply because he always has. 2. Removing the bias does not, in any way, restrict the Fed from taking whatever action they deem appropriate - tightening, easing or standing pat; and whenever they deem it appropriate. The market might overreact to a tightening while neutral. This is a new problem which Greenspan has created with his recent openness on immediately communicating the bias. But then we've already seen how the bond ghouls can overreact to having this incremental data point. Hopefully the newness of this toy will wear off very soon, and the ghouls will resume their normal degree of lunacy. +++++++++ Finally, I believe the likelihood of inflation is nil when Capacity Utilization is less than 81% as it is now. Tightening will, at the margin, stop decisions to add more capacity (the supply side). Excess capacity will disappear as demand continues to grow. This will, in turn, give companies pricing power; and lead to the inflation that Greenspan so desperately seems to want to avoid. What a delicate web we weave ... Ian.

To: Justa Werkenstiff who wrote (6284)	6/29/1999 7:18:00 PM
From: Greg Jung	Read Replies (1) \| Respond to of 15132

Well I suppose the fomc needn't even discuss the matter further, as "everyone knows" they will raise rates the meager 25 points and then see what the economagic computer derives to be the outcome. I heard a very bizarre confidence in this humongo-model (300 equations, blah blah) described by a former fed governor. Reminds me of the Carter or Ford years when everything was flying out of control and they were twirling the knobs frantically in the belief that it mattered much. Now we have Billions of dollars entering the market in the form of rampant speculation, exiting in the form of so many Gen-Xer's batmobiles meanwhile the bubbly is flowing and we reach for the credit card because if the Joneses can afford it, by god we can too. If the fed action is to have any of the intended effect whatsoever it needs to be a shocker, the market has been playing Greenspan for a boob and he needs to wake it up. 50 points and retain the bias. Yeah! doit! Greg