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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (40422)	1/9/2001 10:54:21 AM
From: JRI	Read Replies (1) \| Respond to of 42787

James- On a direct basis, how can Fed adding liquidity thru repo agreement increase the Naz on a daily basis? Is this mostly a confidence thing ("Fed is on our side, so I can put my capital to work in the market") or is there a more direct correlation that the additional liquidity LITERALLY alows big houses/banks to be more aggressive buyers in the market... I am not disputing your corrollary, in fact, I agree with it. Just trying to understand the mechanics.. Also, is the repo agreement the main daily/weekly tool of the Fed? I seem to recall (and believe) that the market really blew up from Nov. 99-March 00..due to Fed "pumping" liquidity in via these instruments (due to Y2K fears)...was there some other instruments (other than repos) that the Fed used at that time...(and should we be looking at them too)... Interestingly, the Fed did not cut rates in the 2nd half of '99..yet, we got that huge explosion at the end of the year...makes me think these short term liquidity measures should be watched extremely closely and may be MORE important that Fed rate cut... Lots of questions...thanks in advance...