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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: ahhaha who wrote (1145)	2/22/2001 10:18:03 AM
From: ahhaha	Read Replies (2) \| Respond to of 24758

FED must come out and state, "to hell with the stock market, if it wishes to crash, then that's what it has to do". This is the only technique that will reverse the slide. AG has to be clever and call the market's bluff. What they can't do is open the money floodgates any wider than they are. They're already pumping at an unprecedented rate. We'll see whether AG is a weakling or whether he has true grit. Every chairman is put into this position. Usually it's under tight money conditions. This time it isn't so it isn't as tough. They have to "just say no".

To: ahhaha who wrote (1145)	2/22/2001 9:14:18 PM
From: ahhaha	Read Replies (2) \| Respond to of 24758

Thursday February 22, 3:27 pm Eastern Time Fed funds futures show aggressive rate cut likelihood By Melissa Goldfine CHICAGO, Feb 22 (Reuters) - Weakness in stocks fueled market speculation that the Federal Reserve might cut short-term interest rates between scheduled meetings, stoking a rally in federal funds futures at the Chicago Board of Trade. ``With equities getting pounded here, especially the Nasdaq, the Fed is probably going to stay on an easing path,'' said John Kadich, analyst at the Gelber Group. Oh yeah. Why is that? They've blown their wad and they can't afford to rescue any more speculators. M2 was up $50 billion in January when it shouldn't have been up at all. That's a 12% per annum clip. If the economy is recessing under 12% money growth, please tell me what lowering rates 50 basis points will accomplish. Please tell me what the markets will do when the rates have to be raised again. The US is slowing with 12% money growth? Conclusion: the amateur speculators operating at the CBOT need to go back to econ 101 and learn the basics. FED has absolutely NO latitude to do anything. The only hope is that they get out of the market before they precipitate an absolute disaster and let fed funds freely float. They will do it sooner or later. The March contract was trading above 94.685, the level that fully prices in a 50 basis point rate cut on March 20, when the Fed next meets. But the contract on Thursday also reached a 94.720 session high, signaling that traders are now willing to wager on the Fed acting even sooner. ``I call it more of a risk premium. People are willing to bet a couple of basis points just on the outside chance that the Fed goes before the meeting. It's not really that people believe that they are going to,'' said Sean Bingham, vice president at HSBC Securities. The Nasdaq Composite Index (^IXIC - news) at one point fell more than 2 percent, and the Standard & Poor's 500 index (^SPX - news) spiraled to a two-year low. The April fed funds contract also posted strong gains, reaching a 95.020 contract high -- pricing in a 100 percent chance for a half point move by the end of the April for the first time since February 1 and up from an 84 percent chance at Wednesday's close. Many traders are looking to the April contract as an indication that the Fed will cut by 50 basis points at the March meeting, said Kadich. Trading in the fed futures contracts perked up on a report from Washington, D.C.-based consultant Johnson Smick that fueled sentiment that the Fed could cut rates before meeting on March 20, traders said. A spokeswoman for Johnson Smick -- which gets attention among some market players who remember its founder Manuel Johnson was a Fed vice chairman in the 1980s -- declined to comment. The Fed as usual also said it does not comment on market rumors. ``Fed funds futures have been bid all morning on this gossip,'' said Chris Rupkey, senior financial economist at Bank of Tokyo/Mitsubishi. Looking ahead, the May fed funds contract is calling for a 4.75 percent overnight bank lending rate by the Fed's May 15 meeting -- implying 75 basis points in cuts by then. Since the beginning of the year, the Fed has eased the overnight bank lending rate one percentage point from 6.50 percent to 5.50 percent. The FOMC, the Fed's policy-setting arm, cut rates in two 50-basis-point increments. One of those easings was a surprise, intermeeting move on January 3. In his testimony to Congress on February 13, Fed Chairman Alan Greenspan said that the Fed can act quickly in response to developments in the economy as a result of technological advances, something it could not do in the past. This is pure BS. FED doesn't have anything more than they always had except now they don't have the liquidity of the T-bond market that existed in the past.