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To: Alan Hume who wrote (7476)	9/27/1998 11:33:00 AM
From: MileHigh	Read Replies (1) \| Respond to of 93625

Alan, I think part of the interest rate cut has already been factored into the market. I see a 200 pt. up on the DOW with a cut and possibly the same number going down with no cut, BWDIK. MileHigh

To: Alan Hume who wrote (7476)	9/27/1998 3:27:00 PM
From: MileHigh	Respond to of 93625

OT Alan, FYI, discusses possible scenarios of a rate cut... Sunday September 27, 2:16 pm Eastern Time WALL ST WEEK AHEAD - Fed takes center stage By Huw Jones NEW YORK, Sept 27 (Reuters) - The Federal Reserve will grab the spotlight this week as Wall Street longs for lower interest rates to help ease the squeeze of global market turmoil. ''The Fed will really be center stage right now,'' said Stephen Roach, chief economist at Morgan Stanley Dean Witter. The rate-setting Federal Open Market Committee meets Tuesday and the outcome should be known by early afternoon. Analysts say it was more of a question of whether the Fed will lower rates by 25 or 50 basis points rather than if there is a cut or not. The short-term federal funds rate is currently at 5.5 percent. But they also warn investors not to put too much faith in a rate cut as a cure-all for the deep-rooted problems in the world's financial markets. ''The large question that remains is whether easing is going to be enough to allay the market's fears and enable it to get its feet under it again,'' said Charles White, managing director of Avatar Associates. Morgan Stanley's Roach agreed: ''We all think the Fed is going to ease right now, but whether it's 25 or 50 basis points, it does not touch the underlying structural problems in the global economy,'' Roach said. ''It's helpful to have the Fed recognize that this is a liquidity crisis, but it's a short term palliative and not a long-term fix,'' Roach added. The central bank's chief Alan Greenspan gave his clearest signal yet of an impending rate cut when he spoke about global turmoil to Senate members last Wednesday. ''I do think that we have to bring the existing instability to a level of stability reasonably shortly to prevent the contagion from really spilling over and creating some very significant kinds of problems for all of us,'' Greenspan said. He added that shaky overseas economies and their fallout on the United States have increased the possibility that the slowdown in the domestic economy will be more than enough to keep a lid on inflation, the Fed's biggest worry. Those global problems homed in on Wall Street in a dramatic way last Thursday when the New York Federal Reserve had to lead a group of banks in a $3.5 billion rescue mission to save the Long-Term Capital Management hedge fund. Top regulators, including Greenspan, will testify before Congress this week to reassure lawmakers there are no more ticking financial bombs lurking on Wall Street. A 25 basis point rate cut has been largely priced into stocks after the Dow soared 257 points last Wednesday while Greenspan delivered his homily. Friday the Dow closed up 26.78 points at 8028.77. It gained 133 points for the week, but the index is up just 120 points for the year. ''It's shaping up very positively for the market, but maybe a little sluggish at the start of the week,'' said Roy Blumberg, chief investment strategist at Josephthal & Co. ''Even with all the bad news, we are 600 points off the recent lows in the Dow. The stock market's actions are not all that bad,'' Blumberg said. Stocks may not rally much if the Fed cuts, but the move could give the market a firmer floor. Keeping rates steady would provoke a selloff, analysts said. End of quarter portfolio adjustments could also be supportive for stocks this week. But investors will also be braced for more profit warnings after one of the bluest of the blue chips, Coca-Cola Co. (NYSE:KO - news), warned Friday that second half profits will be dented by turmoil in global economies and weaker foreign currencies. ''Every day it seems as though you get one of the big stocks which seemed bullet-proof throughout this seven year bull market telling you that the earnings are not going to be there, and it was Coke's turn,'' Avatar's White said. Overall, third quarter earnings for the companies in the S&P500 stock index are forecast to be the worst in seven years. ''I think what concerns us in a big way is the amount of complacency about all these things going on, and people are willing to shrug them off and still go back into the market to find stocks to buy,'' White added. This week's key data will come after the FOMC meeting, with the National Association of Purchasing Management's index for September due Thursday and September payrolls and unemployment numbers on Friday. Payrolls are expected to grow 199,000, weaker than August's 365,000 increase, while unemployment is expected to remain unchanged at 4.5 percent.