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To: Zardoz who wrote (22131)	10/22/1998 6:38:00 AM
From: J. Nelson	Respond to of 116779

Good Read: I find that the rate change was more to hold off Japan, and force the $ v/s Yen change..... Also this drop by the fed did bring Mtg. rates down for two weeks and now there up again. Just to show that the Yen had a lot to do with the forces at work in the action by the Fed in there move. It also caused intrest rates on Mtg. rates to go back up after the change in $ v/s Yen.... Whatcha, think, Jim...

To: Zardoz who wrote (22131)	10/22/1998 8:20:00 AM
From: JG	Read Replies (1) \| Respond to of 116779

Hutch, Great post. Do you have site that monitors such information. Is it your position that if Germans lower interest rates that will take pressure off of Gold? Jim

To: Zardoz who wrote (22131)	10/22/1998 9:15:00 AM
From: Enigma	Respond to of 116779

Hutch - QED? - pat answers always have me a little concerned - especially if I'm too dumb to understand them - you seem to inhabit an american universe where the supreme master - AG - reigns? E

To: Zardoz who wrote (22131)	10/22/1998 1:03:00 PM
From: Mark Bartlett	Read Replies (2) \| Respond to of 116779

Hutch, What is the difference between what AG is doing with M2 and lowering rates and what Japan did for the last several years ... unsuccessfully I might add? Seems to be this controlled creation of liquidity will only work for so long ... sooner or later real economic growth must ensue .. i.e., meaning a demand for goods/services etc. This process of taking money from the bond market so that it can flow to the stock market is IMHO a flight to higher risk returns - that may or may not be based on sound economic principals. With Q3 not looking so good and the presently high PE's - I would suggest this economic transfer is a postponement of the inevitable .... that is a falling stock market. Sooner or later even the "safe" paper instruments are going to be called into question as this process unfolds. Thoughts? MB

To: Zardoz who wrote (22131)	10/22/1998 6:08:00 PM
From: goldsnow	Respond to of 116779

Dollar Falls Against Mark Thursday, 22 October 1998 N E W Y O R K (AP) THE DOLLAR fell against the mark Thursday as Germany's central bank declined to lower interest rates, boosting the mark's strength against the U.S. and Japanese currencies. The mark's rise helped the dollar gain against the yen, but enthusiasm for the dollar continued to be dampened by the global financial crisis in general and Japan's recession in particular. "Mark/yen is the engine at the moment," said Stephen Woolfenden, a senior dealer at Standard Chartered Bank in London. In late New York dealings, the dollar was quoted at 1.6380 marks, down from 1.6484 late Wednesday. The dollar also was changing hands at 117.87 yen, up from 117.00. The German Bundesbank's decision to leave its interest rates alone was widely expected but still boosted the mark. Typically, a country's currency and assets are less enticing when interest rates are lowered. The dollar fell last week when the U.S. Federal Reserve lowered key interest rates. Earl I. Johnson, a foreign-exchange economist at the Bank of Montreal in Chicago, said Germany prefers to keep interest rates steady ahead of the Jan. 1 launch of the new European currency, the euro, which will replace the French franc, the mark and other currencies. "Everybody thinks the Fed is going to cut rates and the Bundesbank is not likely to cut rates," Johnson said, a situation encouraging "mark strength between here and year-end basically." In fact, the dollar gained against the yen as the mark sapped the Japanese currency's strength. But investors weren't completely confident that Japan can implement the banking reforms it legislated to help bring Japan out of its worst recession in decades. Traders also were fearful that more hedge funds will unwind their complex positions and once again create chaos on the foreign exchange market as they did earlier this month, when the dollar plunged in a dramatic fashion not seen in a quarter-century. "The market has been wary about pushing the dollar up too far against the yen in case hedge funds are waiting in the wings to offload dollars," said Chris Sadler, a corporate dealer at Hambros Bank Ltd. Other late dollar rates in New York, compared with late Wednesday: 1.3409 Swiss francs, down from 1.3545; 5.4970 French francs, down from 5.5244; 1,620.40 Italian lire, down from 1,631.00; and 1.5433 Canadian dollars, down from 1.5457. The British pound was quoted at $1.6941, down from $1.6987.

To: Zardoz who wrote (22131)	10/22/1998 7:45:00 PM
From: Enigma	Read Replies (1) \| Respond to of 116779

Hutch - to elaborate a little. It seems that a factor you haven't considered is the question of future profits in listed securities. A couple of ways of evaluating a business would be the use of break up value, and also the discounted present value of future earnings. A valuer looks some way out into the future, (not like a Wall Street analyst who only looks a year out it seems, and more often only a quarter out). There has to be an interest assumption, usually based on prevailing rates. The lower the interest rate the higher the present value (of future earnings), the higher the rate, the lower the p.v. The stock market does something similar in the way it arrives at value, bearing in mind also that the rate of growth has a huge effect on multiples - so we get huge p.e. ratios for growth stocks and have the situation where there is a huge premium given to stocks (eg internet ones) which have shown no profits at all - but which are expected to be profitable at some future date. The market has been discounting, in many sectors, high growth and continued acceleration of growth. If earnings turn flat, or if they only just beat expectations - then we could get a sharp ride - down. This market is looking very tired. What is going to drive it higher than irrational exuberance can take it? The business cycle can't be dead. The banks appear to be pulling in their horns. Large write-offs deplete previous assumptions of bank capital growth. The pat answer I find hard is the one which suggests that AG has only to open the tap a little and markets will go up, and the economy will be fine. I think the outlook for future earnings growth, and all the underlying assumptions build into this marker, will become the dominant factor from here on. E