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

To: SecularBull who wrote (77417)	5/24/2001 10:32:23 PM
From: t2	Read Replies (2) \| Respond to of 99985

You are right. Futures had an initial pop upon the release of AG's text. However, they dropped back down to pre-speech levels. I am sure futures will be very volatile tonight and tomorrow morning ahead of economic reports. Not a great indicator of the level of gains; just seems to point to a positive move for now. AG's speech and Q and A was certainly favorable to the markets. I also believe it may be positive for the bond market as well since he seems to hint the pace of rate cuts is likely to slow..even though he is worried about further weakness; not really concerned about inflation. My understanding is pulled off a great balancing act. Bond yields had started to increase even though he was cutting. That was probably a bit of a concern to him as was the spike in Gold prices. Now with this balanced speech but still more tilted to further rate cuts, he may get a very favorable response out of the debt market and that would also help stocks as corporate borrowing costs decrease; along with mortgages etc..... So far it seems AG has been brilliant in his presentation. In the same way, he made sure that at the last easing that investors realize that the FED is very worried about the economy and indicated further rate cuts. He knew then that if the Naz started to break below 2000 again, the consumer sentiment would have tanked further, making his job more difficult down the road. The market was very fragile ahead of the rate cut. IMHO, he was very aware of the economic impact of a decline in the Nasdaq. Even after his cut, it took a while before the market reacted; just image what would have happened with a 25bp cut on that date or a toning down of the language in the statement. It went against many "experts" views that the FED would tone their easing bias. I could not believe that many were predicting 25bp or 50bp with a very toned down "bias". I am glad Greenspan did not listen to some of these "experts".