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Strategies & Market Trends : Heinz Blasnik- Views You Can Use -- Ignore unavailable to you. Want to Upgrade?

To: Perspective who wrote (2251)	6/9/2003 4:45:47 PM
From: LLCF	Read Replies (1) \| Respond to of 4905

<They can have as much as they want, and already have more than you realize.> It will take a major policy change for them to start lending against corperates.... I would think the dollar will tank that day :) I believe it will take some type of government action for them to buy corporates [dont' know, no expert]... bigger dollar fall that day! < They can pin the short-end of the curve, and there is always someone willing to arbitrage, borrowing money at 1% and buying 3.5% bonds. > That's called 'risk' arbitrage.... and as we can see TODAY in the money markets, they indeed have little control, or perhaps I should say are exercising little control at this point. <This interest rate carry trade allows the Fed to lower long rates without even buying a single long-term security.> Agreed, but this is dependant on players willing to risk the trade... not simply on Fed action. I see this willingness DECREASING, not increasing. This trade is already in bubble prpportions IMO. So IMO, the fed has LESS control going forward through this mechanism... indeed it could break down. DAK