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Strategies & Market Trends : Zeev's Turnips - No Politics -- Ignore unavailable to you. Want to Upgrade?

To: ajtj99 who wrote (2992)	11/4/2001 8:23:22 PM
From: ajtj99	Respond to of 99280

I'm curious as to the opinions of those here on the rate cut on Tuesday. It seems there is a bit over a majority of analysts that see a 50BP cut coming Tuesday. I don't see how we're going to get a 50BP cut this month and more cuts next month. If 50BP happens, that should be it for the year, IMO. For that reason, I belive the Fed needs to cut only 25BP and leave a bit in the arsenal for later. It would also give the ECB a chance to catch up on some overdue rate cuts. For businesses, the cost of borrowing is so low right now that you would only get marginal response from further cuts, IMO. The cost of money has not been a detriment to business the past couple of quarters. Furthermore, the lack of good loan prospects are holding back loans, not the interest rates. Defaults and non-performing loans are way up, and banks seem a bit leery in this environment. Large corporations are re-financing debt, but those rates are tied more to the longer term T-bills than the short term Fed Funds. Anyway, I'm no economist, but cutting the rates further seems loony, and 25BP appears to be loony enough for me. By the way, I believe the retirement of the 30-year T-Bill will do more towards lowering borrowing costs than the coming rate cuts.