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

To: John Hunt who wrote (15573)	4/28/1998 7:43:00 AM
From: John Hunt	Respond to of 18056

Volatility Index quote.yahoo.com^VIX&d=3m Pretty good jump in the volatility index yesterday.

To: John Hunt who wrote (15573)	4/28/1998 8:32:00 AM
From: Defrocked	Read Replies (1) \| Respond to of 18056

Interesting article, John. I understand but disagree with the following quote from your link. "But Steinberg voiced doubt that a stock market decline of, say, 10 percent or 15 percent would push the economy into recession. For one thing, the Fed would presumably respond swiftly to any sign of economic weakness by lowering interest rates -- and with inflation low, the central bank would have plenty of leeway to do so." IMHO a 10% to 15% decline will not push the economy into a recession either. But, if the Fed actively pushes interest rates lower by adding to the existing 11% M3 growth, the FX and bond markets will discipline such irresponsible action. I believe the Fed knows it has limited policy flexibility in the current climate. Active intervention as described above would only provide impetus for a successful EMU and a devalued dollar. Push too hard in that direction and an avalanche of dollar selling could occur. BWDIK.