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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: JRI who wrote (76853)	5/11/2001 1:00:10 PM
From: Keith Feral	Respond to of 99985

I don't think Greenspan has done anything to support or intervene in the value of the stock market at this point. His interest rate cuts have done nothing because FED funds rates are still unrealistically high. Until the FED reduces overnight rates below the yields on the 2 and 5 year Treasury notes, his actions mean nothing. I am not discrediting Greenspan for taking his time to do a difficult job of re-liquidating the market. It takes time to reduce the structure of interest rates from 6.50 % to 4.50 % (and lower). However, the net effect of his change in policy does not begin to have any impact on market psychology until he installs a credible funds funds rate. By definition, overnight rates should be lower than short term Treasury notes. I think the next FED decision will make all the difference in the world. At that point, maybe some of the liquidity the FED has provided can start demonstrating some positive results. I'm still down on my 10 year notes that I purchased back in January after the first 50 basis point reduction. It would be nice to start making non-negative returns on my fixed income positions.