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Pastimes : Ask Mohan about the Market -- Ignore unavailable to you. Want to Upgrade?

To: Elllk who wrote (7453)	11/8/1997 4:51:00 PM
From: Defrocked	Read Replies (3) \| Respond to of 18056

Larry and Threaders, I am now anticipating a 25 bp bump up in the discount rate by the Fed on Tuesday. This move would be consistent with Greenspan's policy of Gradualism and is a Solomon-like choice. BWDIK. Such a slight nudge up would demonstrate continuing inflation resolve by Mr.Greenspan and might get him "off the hook" relative to associated severe declines in US equities. He can sit back and say "I told you so" about equity valuation and watch with caution and pleasure the resultant rally in bonds that may eventually help cushion the stock market decline. IMHO such a move is the lesser evil of the Fed's choices. Given equity market fragility, a 50 bp increase could be too damaging. OTOH, doing nothing risks the credibility of the Fed since the employment numbers were strong across the board. At this juncture, an interest rate decrease of any sort will not be forthcoming. Hence, 25 bp. up will not be a surprise to this observer.FWIW. Let's see if AG has the guts to "split the baby".<g> I would. Good luck all.