Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Biotech / Medical : Biotech Valuation -- Ignore unavailable to you. Want to Upgrade?

To: Biomaven who wrote (7036)	9/5/2002 12:54:58 AM
From: Vector1	Respond to of 52153

Peter, your point on the fed is a good one. The Fed is imo more effective at slowing the economy than stimulating it. Even though investment grade rates are low, the cost of risk capital has increased substantially. The effect is to make investment more expensive and there is little the fed can do about it. I am not an expert on GM but the return on capital in the auto industry has not been great. The consumer fueled by low rates has kept the automakers alive. The GM stock price tells you the market is concerned about how long this can continue. V1

To: Biomaven who wrote (7036)	9/5/2002 9:30:47 AM
From: IRWIN JAMES FRANKEL	Read Replies (1) \| Respond to of 52153

Hi Peter, "I think we're close to the dreaded "pushing on a string" phenomenon with interest rates. I'm not sure that another 1/2 point cut in the Fed Funds rate would really do very much, other than perhaps psychologically." It is hard to know whether you are right. But even if you are - it is not sufficient reason not to cut the short end. We need to try and see if we are pushing on that string. If the economy is that bad it is proof that the Fed is too far behind the curve. "The long rate didn't respond at all to most of the short-term rate cuts - it is now responding primarily to the weakness in the economy." I disagree with you on that statement. Long rates responded exactly as they should - they dropped but more slowly than the short end leading to a steeper yield curve. Now that the Fed is failing to adequately stimulate the short end - the market is flattening the YC. Respectfully submitted, ij