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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: peter n matzke who wrote (4669)	9/21/2001 4:32:46 PM
From: All Mtn Ski	Respond to of 33421

peter, I think the Naz has lost something like 1200 issues since Oct 1998: Message 16394621 Tom

To: peter n matzke who wrote (4669)	9/21/2001 4:34:56 PM
From: Morris Catt	Read Replies (1) \| Respond to of 33421

Here's one number that came from CNBC: NASDAQ Issues Oct 1998 5,719 Recently 4,512

To: peter n matzke who wrote (4669)	9/24/2001 9:51:44 AM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Peter, I saw that you received 2 very timely answers and those numbers sounds about right. Jim Bianco is suggesting that the FED may be willing to let the FED Funds rate go under the rate of inflation, or else they see it coming down from here. Bianco Research 1000 Hart Road, Barrington, Ill. 60010 www.biancoresearch.com SEPTEMBER 19 ~ The Fed rarely allows the [federal] funds rate to dip below the prevailing inflation rate. Furthermore, the Fed has never intentionally lowered the target rate below the inflation rate. It did, however, allow the inflation rate to drift above the funds target in the late 1970s and early 1980s. Currently, however, we are in extraordinary times. The funds rate is 3% -- just 28 basis points above the current inflation rate of 2.72%. Yesterday, the October fed-funds futures contract closed at an implied yield of 2.61%. This implies a 56% chance of a 50-basis-point cut to 2.50% at the October 2 FOMC meeting. If this happens,it will mark the first time the Fed has intentionally lowered the funds rate below the inflation rate (as opposed to holding the funds rate steady and letting the inflation rate creep above it). Does the Fed think inflation is moving lower, or are they willing to lower the funds rate below the inflation rate for the first time? [All items except the] energy inflation rate [are] still moving higher. Currently, the year-over-year rate is 2.73%. The six-month annualized rate is 2.65%. These inflation rates suggest the Fed is willing to "create" a negative real funds rate, should they lower the funds rate to 2.505 on October 2. They must believe the economy is so weak that a negative real funds rate is not inflationary. Let's hope they are right. -- James A. Bianco