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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: locke_1 who wrote (26043)	12/19/2000 5:26:56 PM
From: DiB	Respond to of 65232

By Marjorie Olster NEW YORK (Reuters) - Wall Street's top guns now consider a U.S. interest rate cut in January as a given after the Federal Reserve warned on Tuesday that excessive economic weakness threatens the record expansion. A new Reuters poll found 24 of 26 primary dealers of U.S. government securities expect the policy-setting Federal Open Market Committee (FOMC) to cut the key federal funds rate to 6.25 from 6.50 percent at its next meeting on Jan. 30-31. Only 12 of the same dealers had predicted a rate cut next month in a Reuters poll on Monday. The latest poll was conducted after the FOMC announced it had left rates unchanged but shifted its assessment of the primary risk to the nearly 10-year-old U.S. expansion away from inflation toward an economic downturn. ``We've certainly seen dramatic signs of economic weakness,'' said Doug Porter, senior economist at BMO Nesbitt Burns Inc. in Toronto. ``I think it's fair to say the signs are so fresh the Fed wasn't prepared to cut rates so soon. But it may have been a close call.'' The FOMC statement said the economy was at risk of slowing too much because rising energy costs were cutting into corporate profits and depressing consumer confidence and spending. It also cited shortfalls in company sales and earnings and stresses in markets as factors that could exacerbate weakness. This represented an abrupt about-face for U.S. monetary policy-makers who just six months ago were fretting about a possible overheating of the economy due to booming business and consumer spending as well as the tight labor market. The statement signaled that while inflation worries were receding, recession concerns were growing within the Fed. On average, dealers polled saw about a 28 percent chance of a recession next year, up marginally from a 26 percent chance seen in a Reuters poll conducted at the beginning of last week. The Fed's new stance on risks took many in the markets by surprise. A day earlier, 23 of 26 dealers predicted the Fed would make a more subtle shift in its assessment to say risks were evenly balanced between inflation and economic weakness. Dana Johnson, chief economist at Banc One Capital Markets, said the statement on risks ``virtually promises'' that the Fed will ease in January. ``The debate now will be between 25 and 50 basis points in January. The Fed will be quick to act. It's very clear that the Fed is on its way toward easing before very long,'' he said. Though the consensus on Wall Street was for a modest quarter percentage point rate cut, a number of economists said a more aggressive move could be on the table if the economic picture deteriorates further in coming weeks. Ed McKelvey, vice president and senior economist at Goldman Sachs, said he saw a significant chance the Fed could cut rates even before the January FOMC meeting if the situation worsens. ``If you start to get really weak data, don't rule out a more immediate response from the Fed,'' he said. Carol Stone, deputy chief economist at Nomura Securities International, said she could not rule out a half-point cut in the funds rate in January or an inter-meeting move. Nomura was one of three firms that correctly forecast the Fed shift on Tuesday. Of the 26 dealers polled, 24 forecast the fed funds rate will be at 6.0 percent or lower by mid-2001 compared to 20 in the poll on Monday. Two said it would be higher than 6.0 percent at the end of June compared to six on Monday. Reut16:47 12-19-00

To: locke_1 who wrote (26043)	12/19/2000 5:30:02 PM
From: Jim Willie CB	Respond to of 65232

once again: right analysis, AND lost money with longs good thing I raised much cash this morning over half cash but added to EXTR calls near close funny how EXTR is probably responsible for hurting Foundry all I can think of was the QQQ Jan75 puts I had ordered last tuesday when Naz was stalling at 3000 ordered but not submitted it wont be long that I am out of my misery / jim

To: locke_1 who wrote (26043)	12/19/2000 5:53:52 PM
From: Voltaire	Read Replies (4) \| Respond to of 65232

Hi locke, Greatest buying opportunity of our lifetime. The only people that have a problem here are those on Margin and those with short term options. Laughing tonight after Dealer called and woke me and told me about after hours. Bought EXTR and NEWPORT. BTW - had gotten out of everything but RMBS before Fed release but must admit, got back in NEWP at 85 so not completely unscathed. Just buy quality and laugh in May. Voltaire looking toward Jan.