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Microcap & Penny Stocks : Rat dog micro-cap picks... -- Ignore unavailable to you. Want to Upgrade?

To: nicewatch who wrote (24006)	5/3/2005 5:21:37 PM
From: Bucky Katt	Read Replies (1) \| Respond to of 48463

I was out @lunch with some fellow traders this afternoon, we had expected the raise, and as I reiterated to my lunch mates, most younger than me, back in the day you would get 5.25% on a bank passbook, so the current FED funds rate is still a joke, free money Imo... The deal that I see is that people are as addicted to debt as others are addicted to crack. As Jim Rogers says/asks, maybe things are different this time? And maybe not.

To: nicewatch who wrote (24006)	5/4/2005 12:34:31 PM
From: Bucky Katt	Respond to of 48463

The FED backstory, what a hoot> Statement blunder roils stock trading; correction issued The Federal Reserve angered traders and mystified markets Tuesday by inexplicably forgetting to include a crucial phrase in its closely watched policy statement. The government's blunder sent a wrong signal to investors about the Fed's view of inflation trends, and it wasn't corrected for nearly two hours. During that time traders in the stock and bond markets laid down financial bets based on a Fed "policy shift" that turned out to be an illusion. The policy statement issued by the Fed "is probably the single most read document in the largest economy in the world, and you're telling me that you can't get the thing right before it goes out?" fumed Barry Ritholtz, of the Maxim Group LLC brokerage in New York. "That's astonishingly incompetent." In implementing its eighth consecutive quarter-point rate increase, the Fed's powerful Open Market Committee surprised nobody. Later in the afternoon, however, the FOMC stunned economists and financial markets by issuing a correction to the text of its carefully worded--and intensely scrutinized--assessment of the health of the nation's economy. The Fed said it had "inadvertently" omitted a sentence which, when reinserted, downplayed the Fed's concern about inflation's threat. The disclosure, which came just as the markets were closing, caused the Dow Jones industrial average to reverse course and rise 51 points during the last five minutes of trading. The Dow closed at 10,256.95, up 5.25 points from Monday's close. "Conspiracy theorists will likely have a field day with this bizarre turn of events," Ian Shepherdson, of High Frequency Economics, said of the FOMC's decision to correct its statement. But, he concluded, "old-fashioned human error is more likely the story." Bad time for a misfire The government's slip-up came at a time when Fed statements may be receiving unusually close review. That's because the nation's economy has been flashing conflicting signals of late: Recent data have been showing a significant slowdown in economic growth, even as inflation is making a potentially harmful comeback. Fixing the former condition would suggest the Fed needs to maintain or even lower interest rates, in order to stimulate the economy. But containing inflation, alternatively, would call for higher rates to put the brakes on an overheating economy. After the U.S. economy went into a recessionary swoon in 2001, for example, Fed Chairman Alan Greenspan and the FOMC reduced rates dramatically, to the lowest levels in four decades. Only in mid-2004 did the Fed begin to ratchet up rates from their ultra-low levels. Via a methodical series of quarter-point hikes, the committee has raised the federal funds rate (the interest banks charge each other on overnight loans) from 1.0 percent to 3.0 percent. "Since the rate hike was considered a done deal," noted Naroff Economic Advisors' head Joel Naroff, "most eyes were focused on the statement that accompanied the increase." Unknown to investors, however, the statement was flawed. As it has indicated routinely since beginning the cycle of rate increases last June, the Fed said Tuesday that it thinks it can increase rates "at a pace that is likely to be measured." Such language might seem overblown to many people, but in the financial world that phrasing represents a deliberate, reassuring signal from the government that interest rates won't be bumped up in more aggressive half-point increments any time soon. That message is crucial to mortgage lenders, bond traders and a host of other business sectors that are interest-rate sensitive. The Fed tipped its hat to the recent indications that spending growth "has slowed somewhat." But it also noted that "pressures on inflation have picked up in recent months." In its earlier statements, the Fed has been careful to note that "Longer-term inflation expectations remain well contained." Tougher inflation stance? When Tuesday's statement didn't contain that qualifying second statement, Fed-watchers interpreted the omission as a hint that Greenspan is growing more worried about inflation. That, in turn, suggested that the Fed might be fractionally more inclined to push rate hikes. The statement "is more hawkish than the last one," said one economist. "They are zeroing in on rising inflation pressures." By late in the day, that downbeat interpretation had helped push the Dow down 46 points, and sent tremors through the bond market. But as it turned out, the Fed had somehow simply forgotten to include the "well contained" phrase. The FOMC issued a corrected policy statement which re-inserted the language. The episode was "a very big blunder for the Fed, where blunders don't happen," said Argus Research economist Richard Yamarone. ___________ The lame leading the stupid?