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Strategies & Market Trends : Market Direction Predictions and BS guesses -- Ignore unavailable to you. Want to Upgrade?

To: Vitalsigns who wrote (140)	6/4/2000 11:07:00 AM
From: the Chief	Respond to of 234

Hi Vitals. Absolutely agree with everything you have said. When you start dabbling in the market to fix monetary problems as was done in LTC, you set a new set of rules. Prior to this point AG "did something" and the market reacted. Now he "does" something so the market will react. Subtle but significant difference. His bggest eror was to jump to the .5% interest hike without a full understanding of what the previous hikes had done. Now it is a matter of pride, if he backs off his agreesive rate hikes, he will be analyzed for the poor choice he made in May, if he is agressive in June, he'll kill the growth and US dollar, short term. He truly is in a lose lose! However AG has gone into a pile of dung and come out smellin like a rose before...so I don'tunderestimate the man. As for Gold, well I think Banks just have to send out a subtle hint that they "may" sell a zillion tonnes, and the control of POG is done! the Chief

To: Vitalsigns who wrote (140)	6/4/2000 10:21:00 PM
From: New Economy	Read Replies (2) \| Respond to of 234

If I may make some comments on Economic Theory with respect to interest rates and exchange rate movements. Countries with rising interest rates will see their currency depreciate relative to countries with lower rates. The International Fisher Equation quantified this relationship: Nominal Rates in Home country / Nominal rates in Foriegn Country and then multiply by the spot exchange. Anyway, over the short run when a country raises interest rates...you see the currency appreciate because investors buy up the bonds of that country. However, most Economist suggest that over the long-term the currency depreciates. If you look at the $US in the past few quarters, it has been appreciating significantly due to low inflation rate. This is another theory: Countries with low inflation see their currency appreciate relative to others.