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Politics : High Tolerance Plasticity -- Ignore unavailable to you. Want to Upgrade?

To: Sharp_End_Of_Drill who wrote (15844)	8/6/2002 6:25:48 PM
From: stockman_scott	Respond to of 23153

Lehman Says Fed to Cut Interest Rates NEW YORK (Reuters) - Lehman Brothers on Tuesday became the latest to join the ranks of Wall Street investment banks calling for Federal Reserve interest rate cuts in coming months to prevent a renewed recession. Lehman Brothers said it expected the Fed to trim its benchmark overnight lending rate by 75 basis points to 1 percent by the end of the year. Previously, Lehman had forecast the Fed would keep interest rates steady until next year. Lehman's co-chief U.S. economists, Ethan Harris and Steve Slifer, cited recent economic data showing the recovery stumbling, including weakening manufacturing and service sector growth in July, plunging consumer confidence, meek job gains and a drop in durable goods orders. "While some of the weakness may reflect the normal ups and downs of the data, the concern is that this weakness is just the beginning of a growing shock to the economy," the economists wrote in a report titled "No Mas -- The Case For a Fed Easing." Perhaps more important in changing their forecast, the Lehman economists said tightening conditions in credit markets would likely hurt business investment and hiring. "The thing that was the final straw is the conversations with the credit strategists at Lehman talking about what a tough borrowing environment it is," Harris said, citing widening corporate bond spreads, tightening bank standards and a closed off commercial paper market. "Really it's a story around an anemic recovery with little momentum, a falling stock market with the wealth affect showing up with a lag, and layered on top of that very tight credit conditions holding back on the corporate sector," Harris said. The most likely scenario was for the Fed to change its risk statement at its policy meeting next week to declare a greater threat of renewed economic weakness and for it to cut rates by a quarter-percentage point in September, October and December, the economists said. Currently the federal funds rate stands at 1.75 percent. In the past few days, Goldman Sachs changed its forecast to a 1.0 percent fed funds rate by year-end and Deutsche Bank said the Fed would cut rates by 50 basis points in coming months. Both firms said the central bank would want to act preemptively against any threat of a so-called double-dip recession. Dresdner Kleinwort Wasserstein is also calling for a Fed rate cut, to come at the Fed's Sept. 24 policy meeting.

To: Sharp_End_Of_Drill who wrote (15844)	8/6/2002 11:01:03 PM
From: Jim Willie CB	Read Replies (2) \| Respond to of 23153

eventually, only eventually the trade gap will narrow and foreign exporters will wonder why their business doesnt pick up more quickly I dont expect any meaningful narrowing in the current account deficit for at least 18-24 months I have said for months that the trade gap will mysteriously not narrow because foreign economies will be hurt badly their whole economies are set up to take advantage of their own weaker currencies a strong dollar kills profit margins for those who supply American products you put it well, that only goldbugs comprehend the dollar the Fed understands though, all too well the dollar is now due for a massive downtrend versus SwissFranc it could slice off more than 30% more what many experts imho fail to understand is the power of momentum in currencies as the dollar sells off, hyperspeed could enter the picture the entire US economy is geared for a very strong dollar as effects are felt, more factors will push the dollar even lower all hell will break loose, and few will expect it as it gets out of control, a collapse is actually possible some really smart experts fear such a scenario esp if we continue to see Mickey Mouse US leadership unfortunately, our economy and Asian economies have now suffered (not enjoyed) 25 years of de-evolution and distortions it will be these twisted deformities that will cause untold havoc as the dollar correction unfolds not only will import prices rise but the greatest risk is TrezBond rates will rise from foreign TBond selling so many imbalances must be cleaned, it is mindboggling I totally agree the Fed must defend the whole US Backyard, our Home Businesses and sacraficing the dollar will be expedient if it gets us to where we must go a full-blown degradation into a recession would be horrible but I suspect the Fed's actions only forestall the inevitable pain there will be much hope that the dollar will not fall too far, cause too much damage, lead to too much world banking turmoil, force too many job losses, close down too many companies, move too many mfg plants back home but it will, I know it will as sure as the nose on my face gonna be ugly, downright fugly and gold will be almost the only winner with Mideast war, the oil sector could share the stage but given Russia's presence, only if war in a couple years, the world economies will look very different inflation will be springing up all over the landscape smash 20% of the companies in any given oversupplied sector, wait a year, and pricing power might return gonna be wild and exciting inflation will win, but when? / jim