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To: surfbaron who wrote (105496)	9/24/2001 7:27:01 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 152472

surfbaron -- re : your thoughts "auto industry and its related sub industries ..." Two weeks ago, if someone had been planning on doing something like taking their kid to go look at some colleges that they might be applying to ... Of course they would just take a plane (assuming they did not live real close). Now, I would guess that some people really would hop in their car and drive many hundreds of miles round trip. Similarly for attending a wedding, going on a vacation, etc. etc. It is possible we will see good times in the auto industry (at the expense of the airline industry). Jon.

To: surfbaron who wrote (105496)	9/24/2001 11:30:45 PM
From: Keith Feral	Respond to of 152472

I think the financial community has been waiting for a negative shock to consumer spending to complete the worst case scenario. Events in the past few weeks would suggest that exogenous shock is in place. The restoration of stability to financial lenders will create an avalanche of liquidity just like 1994. There are 2 contradictory theories on interest rates and the direction of stock prices. Money managers argue that stock prices closely relect the direction of Treasury yields. Lower interest rates equal higher equity prices. In reality, the truth could not be more different. Lower interest rates at the FED funds level are negatively correlated to stock prices until there is a steep enough yield curve for banks to lend at a huge profit. Long term rates have not budged in a positive direction despite eight consecutive FED fund reductions. At this point, a restoration of profits in the financial community mark create a sharp reversal in EPS. The thing that amazes me the most is the speed to which the FED has restored the balance to the yield curve. Historically, there is a 250 basis point premium between the short and long end of the curve. I would hope the next 50 bp reduction by the FED next Tuesday will cause lenders to bring down their mortgage rates. It would be in very poor taste for the long end of the yield curve not to react sharply to the 9th consecutive interest rate cut. Even the bond market is subject to some decency.