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To: pater tenebrarum who wrote (80791)	12/22/1999 11:01:00 AM
From: clochard	Read Replies (1) \| Respond to of 86076

They may really throw a warbler and just keep going. When you're the biggest military power in the world and your main competition is gone, what's the problem? Wednesday December 22, 11:01 am Eastern Time Alert: Fed Confirms Buys Coupons Maturing 03/31/01 to 02/28/02, for Delivery Thursday (options, currency)

To: pater tenebrarum who wrote (80791)	12/22/1999 11:07:00 AM
From: Ken98	Read Replies (1) \| Respond to of 86076

It ends one of two ways. The right way is that the Fed does its job right after the first of the year and takes back the ocean of money they have put in to the system and let the market set the funds rate. Based on what we have seen that scenario stands a snowballs chance in Hades. The most like way it will play out is the Fed will continue to play paddy-cake with WS. They will try and talk it down in early January. That will not work (it hasn't yet) so they will start in late January - early Feb. sending very clear signals that they will raise rates a 1/4 point and do so at the next meeting. At which point it will again be wildly greeted by WS as bullish because "the Fed is done with their tightening cycle and have inflation under control." All the while the Fed keeps adding. At some point in the spring commodities inflation takes hold and the results of a lot of the net companies from the 4Q come in at less that spectacular levels and they are unable to come back to the feeding trough and go bust. And the whole thing reverses. Also: <<FED CALL: Overnight repos likely; coupon pass possible By Michael S. Derby, Bridge News New York--Dec 22--After intervening with 36-day repos, the Federal Reserve will likely intervene again Wednesday morning with overnight system repurchase agreements to address a technical need for reserves, analysts said. It may also intervene with another tranche of its current coupon pass. * * * Although the fed funds rate opened this morning on-target at 5.50%, daily add needs continue to rise as the year-end approaches, analysts said. While the main factor pressuring bank reserves remains the very high levels of circulating currency, there's some additional pressure from rising Treasury balances at the Fed. "I think they'll close the first week of the current maintenance period by executing yet another overnight system repo," said Dana Saporta, an analyst with Stone & McCarthy Research Associates. The size will likely be around $3 billion to $4 billion, she said. The current period's daily add need began at around $13.2 billion, and with current operations factored in, has now been whittled down to about $4.6 billion per day, Saporta said. Given the new round of outright purchases that began on Monday, Saporta said "the coupon pass watch is still on" and the Fed could come in buying at anytime. On Tuesday, the Fed came in with $2.525 billion in overnight repos. The fed funds averaged 5.52% Tuesday and traded between 5.00% and 5.625%. End>>