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

To: tekgk who wrote (12811)	1/8/1998 8:48:00 PM
From: Zeev Hed	Read Replies (2) \| Respond to of 18056

Tek, what is the story with the Philipines and Singapore, both markets are down about 20% since the begining of the year. Zeev

To: tekgk who wrote (12811)	1/8/1998 11:24:00 PM
From: Tim McCormick	Read Replies (1) \| Respond to of 18056

tekgk, you may have misunderstood me. I was referring to open market operations, where each day the fed either buys or sells treasury securities. When they judge there is upward pressure on the fed funds rate or not enough liquidity in the banking system, the fed buys treasuries in the open market to provide cash. When they judge there is too much liquidity in the system and downward pressure on the funds rate they sell securities to drain cash. Today was the second day in a row they drained cash. This is sometimes viewed as a seasonal thing to adjust for Christmas or other factors. It has been rather unusual lately though; in that, the fed has not drained reserved for 18 months, and now they do it two days in a row. The fed had been allowing the money supply to balloon way over their assumed target growth rate. Maybe they see something inflationary brewing, because these open market operations have traditionally signaled when the fed was about to change the fed funds target rate. This is unlikely though, more likely it is seasonal. Something to watch. Tim