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Strategies & Market Trends : Rande Is . . . HOME -- Ignore unavailable to you. Want to Upgrade?

To: velociraptor_ who wrote (47348)	2/14/2001 8:27:56 AM
From: Rande Is	Read Replies (2) \| Respond to of 57584

Hi, Velo. I was talking about the NEWS of the FED moving to a position where they would feel the need to drain the markets of liquidity. Now you are absolutely correct that $3 billion is nothing on the larger scale. . . but with Greenspan not giving any promises of more rate cuts, then news of the FED draining reserves before the markets experience a recovery. . . .the combination, IMO, did much damage to already shaken investor sentiment. [The markets have historically tended to track liquidity charts.] And I think that many investors were looking for the FED to throw us a bone yesterday. . . .[though those that know better, knew Greenspan would say nothing]. Instead, we got no news. . . we got the usual negative spin by the media. . . and as your link clearly shows. . . .after an extended period of ADDING liquidity, the FED turns on the markets. . . and begins to drain. The feeling changed from the FED on the side of the Bulls. . . to the FED moving back to a neutral position. . . or even a possible lean back away from helping drive a recovery. The last week of January, the FED actually DRAINED liquidity by 11.7 billion: biz.yahoo.com Yesterday's 3.1 billion was the largest yet of the single day drainage reports, indicating an overall move toward draining of liquidity. . . . and it implies that the first week of February will also show more drainage. Personally, this trend has me more concerned than interest rates. The FED moves affect investor psychology. . . which in turn moves the markets. "Don't fight the FED". So I believe that in an INDIRECT way, yesterday's FED shift toward draining liquidity was a sort of last straw for many investors. . . .a bit of capitulation, perhaps. The positive spin to this move toward drainage. . .is that perhaps the FED is helping to FORCE a final capitulation period. . . .which seems to be absolutely necessary before the sidelined money begins to flow once more. . . Sort of a rocking the car back and forth to help it out of the mud. I hope that clarifies my concern. Rande Is

To: velociraptor_ who wrote (47348)	2/14/2001 12:04:34 PM
From: Rande Is	Read Replies (4) \| Respond to of 57584

FYI, Fed drained another $4.7 billion. . . . Why is it I hear a giant sucking sound?

To: velociraptor_ who wrote (47348)	2/14/2001 1:15:09 PM
From: bobkansas	Read Replies (1) \| Respond to of 57584

Hi velociraptor. I have enjoyed reading your web site over the past 3 months. My own impression is that we are in a bear market that will likely last for most of this year and perhaps into 2002. My question for you is as follows: Can Greenspan provide sufficient liquidity to the market by increasing the money supply so as to inflate the stock market over the course of the next couple of months? While it may have helped to over inflated the stock market in late 1999 and very early 2000, I do not see how it could work this time. Your thoughts would be greatly appreciated. Best regards, Bob PS. I just read your and Rande's thoughts. My belief is that Greenspan will HAVE to resort to increasing the money suppy to keep the economy afloat. He wants to use the money suppy in a hidden sense to acheive his agenda. He uses interest rate cuts to acheive his agenda "in the public's eyes" so to speak. He wants to reserve rate cuts as much as possible so that he i.e. the Fed retains a sense of control of the economy and respect from the public at large for as long as a period of time i.e. during this year. He should cut rates immediatly by at least 200 basis points imo. He would NEVER do that because the fed than appears helpless to guide the economy forward. He wants to appear in control and it is that need for control that will keep us in a recession longer than we need to be imho.