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Strategies & Market Trends : Currencies and the Global Capital Markets -- Ignore unavailable to you. Want to Upgrade?

To: Robert Douglas who wrote (862)	10/9/1998 1:40:00 PM
From: Henry Volquardsen	Respond to of 3536

Robert, That rumour of the Fed cutting between meetings was all over the market this morning. In fact the hot rumour was they would cut at 8:30. FWIW the most recently released FOMC minutes show that they in fact had had a phone meeting between the official meetings to discuss a rate move. Very rare for them to include something like that in the official meetings and a lot of people have taken it as a message from the Fed that they are prepared to move between meetings if need be. Also I remember a time when it was more common for the Fed to act between meetings than at the meeting. Prior to Greenspan they almost always acted between meetings. Also fwiw I think they may actually wait for the current turmoil to subside. The activity we have seen is not based in economic fundamentals but is strictly a leverage impact. So changing the economic outlook will do little to stem this current tsunami. You just need to let it run its course and then focus on fundamentals. In addition I think the Fed is concerned about giving the appearance of acting to bail out the hedge funds given the recent criticism regarding LTCM. One final point is that in the current very skittish market such a move might actually give the message that they know something about a big bank being in trouble and cause even more turmoil. Right now they will probably let things play out a bit more before easing rates again. Look for them to use some economic release as cover. Also I closed all my positions today. I want to enjoy the weekend as well. Henry