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Strategies & Market Trends : Asia Forum -- Ignore unavailable to you. Want to Upgrade?

To: Zeev Hed who wrote (7150)	10/16/1998 11:00:00 AM
From: Henry Volquardsen	Read Replies (1) \| Respond to of 9980

Zeev, I have the same concern. I think the Fed is right to act and suspect they will be able to pull it off but there are risks. Henry

To: Zeev Hed who wrote (7150)	10/16/1998 11:00:00 AM
From: Bosco	Respond to of 9980

Dear Zeev - without repeating everything already said here, there are 2 additional points to support Chairman Al from my pov. 1. as predicted [by retail sales etc,] today CPI looks a lot different than the PPI shown yesterday. 2. Even if there is a danger of liquidity flowing in to equity, one of the concerns about the looming possibility of recession is that it could be started on Wall Street instead of in the Main Street this time; therefore, by preventing a Wall Street meltdown, the Fed directly or indirectly would also prevent the Main Street meltdown. best, Bosco

To: Zeev Hed who wrote (7150)	10/16/1998 11:27:00 AM
From: Sam	Respond to of 9980

Zeev, Even if the money finds its way into equities, eventually that should lead to lending for other purposes. If people feel flush, they will buy. If they buy, someone will make the things that they buy. To make that those, you need capital at some point. You get capital from banks or from the equity market. It would seem that velocity should become a key measure to watch here. The example of Japan is bogus, it seems to me. We never have had the bubble that they had there in the 80s, especially in real estate and their equity market. Even at our early 80s worst. Even Houston/Dallas (the oil bubble) of the late 70s, early 80s wasn't as bad as Tokyo was in late 80s. And what was their PE at one time, something like 60 on peak earnings? We're pikers by comparison.

To: Zeev Hed who wrote (7150)	10/16/1998 11:54:00 AM
From: MikeM54321	Read Replies (1) \| Respond to of 9980

Zeev writes, "Henry, I hope the Fed's are not miscalculating. They may flood the market with liquidity because of the rising "dfear of lending', but if that money finds its way in equities rather then in lending, they will have to fight the liquidity trap from lower interest rate plateau, where, as Japan has shown, it becomes less and less effective." Bosco writes, "one of the concerns about the looming possibility of recession is that it could be started on Wall Street instead of in the Main Street this time; therefore, by preventing a Wall Street meltdown, the Fed directly or indirectly would also prevent the Main Street meltdown." Zeev, I felt exactly as Bosco did, when the rates were cut and the market moved upwards. I am concerned a recession may be started due to the Sept/Oct Mini-melt. Funny, most commentators don't seem to mention this aspect of a recession too much. Anyway, can you explain again, why you wrote, "I hope the Fed's are not miscalculating." .... I don't quite understand how your argument works? Do you mean you worry investors will move money into equities rather than buying debt? Thanks, MikeM(From Florida)