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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (2780)	12/29/2000 3:05:21 PM
From: Robert Douglas	Read Replies (1) \| Respond to of 3536

Another reason that I think the Fed will act soon and swift is the global economic picture. They cannot let a normal cyclical downturn in the U.S. turn into a worldwide recession. That would create too many problems, especially for many emerging economies. To avoid this, the demand that will be lost from the U.S. must be made up abroad. The sooner the Fed cuts here, the sooner central banks around the world can follow suit without fear of weakening their currencies. As always, there is a lag between monetary policy and its effects. If the Fed waits until they see the whites of the recession's eyes (e.g. rising unemployment) it may be too late to forestall a global slowdown. I believe they made a mistake by not cutting in December and they know it. They will cut a half point at the end of January and it will be followed by more cuts until the FF rate is below 5%, perhaps 4%. This, I believe, will be enough to prevent recession.

To: Robert Douglas who wrote (2780)	12/29/2000 6:54:45 PM
From: Zeev Hed	Read Replies (1) \| Respond to of 3536

Roberts, thanks, it helps to know we are going to read the same "book", 20 decline on the Michigan survey surely means a recession is in the offing. Henry, I agree with you on the effect of Crude, the difference between $35 to $25 a barrel (if we stay in this range) could mean roughly a tax cut of $500 per year per "normal household", IMHO ( a very rough number mind you, yet an important impact). I wish someone would devlop the impact on consumer expenditure of each $1/barrel increase or decrease in crude. That would be an excellent measure to have. Elasticity is not that high in this sector, so the numbers should be "derivable". Zeev