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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: John Pitera who wrote (3205)	1/29/2001 3:39:44 PM
From: John Pitera	Respond to of 33421

FED FUNDS futures are pricing in a 97% chance of a 50 basis point FFunds cut on Wed. --------The February federal funds contract is pricing in 97% odds for another aggressive 50 bp Fed ease on Wednesday. We agree that another strong policy ease is needed and will be directed after the two day FOMC meeting. The economic releases due before the 14:15 ET Wednesday Fed announcement may provide some added spin. Tomorrow's consumer confidence index may be the front runner as a further drop in expectations helps cement further declines in high-priced purchases in the first quarter. The Michigan expectations component fell 7% in January to increase the two month plunge to a foreboding 17%. Q4 GDP is released Wednesday and provides a base to compare weaker current quarter growth.<?b> However, the 2.3% consensus GDP estimate doesn't show the economic weakness Greenspan signaled in last week's testimony. The heavy-hitters of NAPM and the employment reports are released Friday. -------

To: John Pitera who wrote (3205)	1/29/2001 4:56:17 PM
From: Yorikke	Respond to of 33421

John, I think Ron and David Stern outlined far more practical reasons for AG's move to support tax cuts.. The simplest explanation is that to do away with the deficit would limit the ability of the Fed to effect monetary policy through traditional methods of liquidity management and interest rate controls. Therefore the Fed moves to keep the deficit from shrinking to a point it judges would limit its policy objectives. Trying to explain things from the alternative perspective, the recognition that Investment is limited by surpluses, and the records of Japan and England with regard to deficits and their long term effects, is much less satisfying at this point. The question is, when we stop spending money on education, where else are they going to be able to agree to spend it, or give it back for that matter? The fact is surpluses at this point drain away investment capital. Unless we are willing to mandate that all Americans become highly leveraged and regularly increase that leveraging, the capital drain via surpluses will have an impact. Though with lower interest rates we may just get that additional leveraging. Like the song says... It will be 'Money for nothing! However I have a problem believing that, as I have never seen the second half of that lyric 'Chicks for free!' ever be even remotely realistic. The reference to terrible bearishness brought to mind you statements of the past weeks on your experience in Australia. Another mark of the Japanese turn around? regards