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Strategies & Market Trends : InvestRight - Short Term Trading St -- Ignore unavailable to you. Want to Upgrade?

To: Les H who wrote (184)	9/16/1998 2:29:00 PM
From: Jeffrey L. Henken	Read Replies (1) \| Respond to of 939

Well Les the market is starting to tank now that Greenspan let us all down. It pisses me off. I wish he would get caught having an affair so we could impeach his ass. Please excuse the language but this market has been way too painful for those of us who have been long. One thing is certain the market is indeed totally in tune to what the FED Chief has to say. InvestRight Regards, Jeff

To: Les H who wrote (184)	9/16/1998 8:07:00 PM
From: Ray Tarke	Read Replies (1) \| Respond to of 939

Fed watchers see FOMC easing by yearend By Elizabeth Lazarowitz NEW YORK, Sept 16 (Reuters) - As the economic crisis that has spread around the globe creeps closer to home, odds are rising that a nervous Federal Reserve will lower U.S. interest rates by the end of the year, economists polled by Reuters said. While analysts remained split over the likelihood of a Fed move at the next Federal Open Market Committee meeting on Sept. 29,, they said intensifying international financial problems have set off an alarm for Fed officials. On average, economists predicted the central bank would keep the fed funds target steady at the September 29 FOMC meeting and then lower the rate to 5.25 percent at the November 17 meeting. The Fed has already acknowledged that risks to the U.S. economy are rising, said Jim Glassman, senior economist at Chase Securities Inc. ''Therefore, there's no reason why the Fed's rates have to be above long-term interest rates,'' he added. At 5.50 percent, the federal funds rate remains about 25 basis points higher than the 30-year bond's yield. Fourteen out of the 20 analysts surveyed predicted the Fed would lower the key short-term rate by at least 25 basis points by the end of 1998, and some projected the funds rate would drop below 5.00 percent. By most accounts, the effects of the global turmoil on the United States have been slight so far, but fear of contagion heightened as the flu infected Latin America, a region to which U.S. investors are considerably exposed, economists said. In a Reuters survey on August 13, only one out of 23 analysts predicted the Fed would ease by the November meeting. While bond-market investors have been pricing in a Fed ease for some time, a recent speech by Fed Chairman Alan Greenspan increased their conviction a rate cut might be on the horizon. The market largely interpreted Greenspan's remarks on September 4 as indicating the Fed had removed the tightening bias. Before the Greenspan speech, ''all indications were that the Fed would wait until we saw (more) effects from the Asian crisis on our domestic economy,'' said Fred Levin, economist at Aubrey G. Lanston & Co. ''Greenspan's comments indicated that he's not going to wait, that he's more likely to want a preemptive move at the September meeting,'' Levin said. But some economists doubted whether a U.S. interest rate ease would calm global debt markets and predicted the Fed would be looking for domestic justification for an easing, such as a slowdown in consumer spending. ''They would like to be able to move without having to blame it on the financial turbulence we've seen,'' said Mike Cloherty, economist at Credit Suisse First Boston Corp. The possibility of going out on a limb for overexposed investors after years of warning against just such ''irrational exuberance'' would create a moral hazard for the Fed, Cloherty added. Cloherty said the probability of an easing in the next few months has risen to 75 percent from 50 percent near the beginning of September. Some analysts, however, maintained their faith in the continuing strength of the U.S. economy. Joshua Feinman, economist at B.T. Alex, Brown Inc., noted that the U.S. economy has weathered the storm for more than a year. ''What's to say it won't continue to,'' Feinman added. However, Feinman agreed with most other economists polled that the risks to the domestic economy and the likelihood of a Fed easing have increased. ''It's no longer rational to have (Fed) policy so tight,'' said Glassman of Chase Securities. Events overseas will weigh negatively on business and consumer spending and earnings, putting the Fed on the defensive, he said. "We've not seen the end of it," Glassman added. Individual results of the survey follow: Fed Funds Target Rate Company Sept Nov Dec Aubrey, Lanston 5.25 5.25 5.00 Bear Stearns 5.25 5.00 5.00 BT Securities 5.25 5.25 5.25 Barclay's Cap 5.50 5.50 5.50 Chase 5.25 4.75 4.75 CS First Boston 5.50 5.25 5.25 Daiwa 5.50 5.50 5.50 Dean Witter 5.50 5.25 5.00 DeutscheBank 5.50 5.50 5.50 DLJ 5.00 5.00 5.00 Goldman Sachs 5.50 5.50 5.50 Greenwich Capital 5.50 - - JP Morgan 5.25 5.25 5.00 Lehman Brothers 5.50 5.25 5.25 Merrill Lynch 5.50 - 5.25 Nationsbanc 5.50 5.50 5.25 Nikko Securities 5.50 5.50 5.50 Nomura 5.50 5.25 5.25 Prudential 5.25 5.25 5.25 Zions First Nat Bnk 5.25 5.25 5.00 -------------------------------------------- No. of forecasts: 20 18 19 Averages: 5.39 5.28 5.21 The Fed will cut when they meet on 9/29 or 11/17. How much .25 basis. I'm starting to lean toward 11/17, but things can change in the duration of two weeks. The Revolving World of International Market Crisis... Regards, R.T