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Strategies & Market Trends : Stocks Crossing The 13 Week Moving Average <$10.01 -- Ignore unavailable to you. Want to Upgrade?

To: James Strauss who wrote (9426)	8/18/2001 5:18:50 PM
From: Sergio H	Read Replies (2) \| Respond to of 13094

Jim, a half point drop could go either way. It might inspire some buying or create a panic run to the exit. My opinion is that the we're going to see a 1/4 cut as the Fed waits to measure the impact of the tax refunds. We'll get a first glimpse when the August retail numbers are reported. The bond market is convinced that we're not going to see 1/2 point reduction. I was sure that we were going to see eights come into usage last time the fed met. 3/8's cut sounds right again this time. Not too much and not too little. Bondtalk's Fedometer: bondtalk.com Afterall is said and done, what does the fed easing have to do with the stock market? A recent Bizweek article on the correlation between fed easing and the stock market sites research from the National Bureau of Economic Research. The word "heteroskedasticity" pops up in this research paper. Made me open my dictionary. The gist of the research, (give or take heteroskedasticity): < The results indicate that monetary policy reacts significantly to stock market movements, with a 5% rise (fall) in the S&P 500 index increasing the likelihood of a 25 basis point tightening (easing) by about a half. This reaction is roughly of the magnitude that would be expected from estimates of the impact of stock market movements on aggregate demand. Thus, it appears that the Federal Reserve systematically responds to stock price movements only to the extent warranted by their impact on the macroeconomy. > papers.nber.org Going back to Bondtalk, Tony Crescenzi presents good evidence to back his opinion that the manufacturing sector has bottomed out, and that our economy will avoid a recession, : bondtalk.com Sergio