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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (57636)	8/2/2000 6:02:39 PM
From: Les H	Read Replies (1) \| Respond to of 99985

Size Doesn't Matter Updated 11:12 AM ET July 31, 2000 WASHINGTON (Reuters) - Toss aside the theory that the size of Alan Greenspan's briefcase on the day of a Federal Reserve meeting indicates what will happen to interest rates. It's the quality -- not quantity -- of its contents that counts in the central bank's decision, the Federal Reserve Bank of St. Louis said in the July issue of its quarterly magazine. "It's not the size of the briefcase that matters, but the type and quality of the information found inside," St. Louis Fed vice president William Gavin and research associate Rachel Mandal said. Desperate for clues on the direction of interest rates, some traders look at how stuffed Fed Chairman Greenspan's briefcase is as he enters rate-setting meetings. The theory goes that if the briefcase is packed, rates will go up. If it's slim, rates will either remain unchanged or will fall. Some television networks even cut into their regular programming to carry live shots of Greenspan hurrying to the meeting, briefcase in hand. Financial web sites display pictures of the chairman's briefcase on the day of the meeting. But Gavin and Mandal point out that the briefcase Greenspan carried to the May meeting was "reportedly the thinnest in years" and yet Fed officials raised interest rates by half-a-percentage point, the sharpest increase in five years. Gavil and Mandal's advice? Drop the briefcase barometer and go back to the statistics that Greenspan, a well-known data nerd, likes to look at for clues on the economic outlook: gross domestic product, personal consumption expenditures, the consumer price index and even supplier deliveries.