Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Bosco who wrote (7527)	11/17/1998 3:15:00 PM
From: Michael Sphar	Respond to of 9980

Some Fed Cut feedback: Tuesday November 17, 2:43 pm Eastern Time (Note: this article is ''in progress''; there will likely be an update soon.) INSTANT VIEW - Fed cuts U.S. interest rates 25 bps NEW YORK, Nov 17 (Reuters) - Following are comments from U.S. analysts after the Federal Reserve lowered the federal funds rate by a quarter percentage point to 4.75 percent and cut the discount rate by a quarter percentage point to 4.50 percent. Twenty-two of 25 economists polled by Reuters last Friday had expected the central bank to trim the federal funds rate while the other three analysts had expected no change. MIKE MALPEDE, SENIOR CURRENCY ANALYST, REFCO GROUP LTD: ''This is dollar bearish, I think because they also cut the discount rate.'' DAVID BERSON, CHIEF ECONOMIST, FANNIE MAE: "We thought they would ease. I am surprised that they cut the discount rate as well. It is more of a signal they are concerned about the world financial situation... "What they are most concerned about is the correct functioning of domestic financial markets. Many of their models may indicate growth will slow substantially in the U.S. in 1999. They are trying to be proactive with monetary policy. ''This is the last cut this year. I think that if the economy slows next year, we could see more Fed easing ... another 25 to 50 basis points over the next three to six months.'' ELLIOTT PLATT, MANAGING DIRECTOR OF ECONOMIC RESEARCH, DONALDSON, LUFKIN AND JENRETTE SECURITIES CORP.: "This move, (Wall Street) economists certainly expected it, a lot of people on the street doubted it, but economists expected it. "The Fed cited unusual strains remain in financial markets, which suggests they're still concerned that emerging markets spreads and high-yield spreads are unusually wide. "Even though we've had some issuance of junk bonds and high-grade corporates in recent weeks, that's still minuscule issuance volume relative to what we've seen. ''Net-net they're still concerned that this credit crunch at some point could shut the economy down. That's why they're easing.'' MICHAEL NIEMIRA, ECONOMIST, BANK OF TOKYO-MITSUBISHI LTD: "It's again a case that the Fed wants to take out an insurance policy that the expansion continues through next year. To that extent it's a prudent move and probably makes sense sooner rather than delaying it until next month. ''I think now we see how the market and economy reacts to it. Now there's some breathing room. Going into 1999 I suspect we may see another cut but that may not come until the springtime.'' DAVID LEVY, DIRECTOR OF FORECASTING, JEROME LEVY ECONOMICS INSTITUTE AT BARD COLLEGE: "It was probably a very close decision. The Fed is aware there are big problems brewing. And a major reason to hesitate would have been concern about giving the financial markets too much to get drunk on. ''There is a lot of worry about wealth effects and potential negative wealth effects down the line. The Fed certainly can't be happy that the economy is depending on a personal savings rate that is zero or negative. The fact they moved indicates the majority correctly sees the risks on the downside are considerably greater than risks we'll have inflationary growth any time soon. It may be a few months, but sooner or later, we're going to see even more reason for the Fed to reduce interest rates (further).'' DAN SETO, SENIOR ECONOMIST, THE NIKKO SECURITIES CO. INTERNATIONAL: ''I think that the 25-basis point discount rate cut gives (the Fed) some room for further fine tuning. There are broad expectations on the discount rate, but I think most analysts would look at their action, or inaction, on the discount rate as a clue to where they stand in terms of a bias. The fact that they did cut the discount rate suggests that they are prepared to move again if necessary.'' PETER KRETZMER, SENIOR ECONOMIST, NATIONSBANC MONTGOMERY SECURITIES LLC: "I'm a little surprised that they moved the discount rate 25 basis points. They clearly left the door open to further rate declines. ''I think Alan Greenspan is worried enough about financial markets that he didn't feel bad at all leaving the door open for further declines. That's basically the story.'' DON HILBER, ECONOMIST, WELLS FARGO & CO.: "What might have caused some optimism in the financial markets might be the fact that not only was the federal funds target rate cut but also the discount rate. ''One Fed concern has been credit spreads in this country. The fact that, though they may have narrowed a bit, the spread between the 10- or 30-year Treasuries and comparable maturity corporate bonds has stayed fairly wide ... not just for junk bonds but for fairly safe corporates, and I think that was a main reason behind another cut. To bring that spread down, get people investing again in corporations that need the ability to borrow to keep on expanding.'' JIM MCCORMICK, CURRENCY ANALYST AT J.P. MORGAN & CO.: ''The stock market rally is providing support for the dollar but it is difficult to determine an immediate trend for the dollar as that will develop over time. What is clear is that this was the last rate cut in a round of internationally motivated cuts and what happens from here will depend on U.S. domestic conditions.''

To: Bosco who wrote (7527)	11/17/1998 4:47:00 PM
From: Z268	Respond to of 9980

Michael, Bosco, on the Fed cut... Here are two relevant articles: dailynews.yahoo.com news.bbc.co.uk which argues the need for further interest rate cuts from a global perspective. The risk for the US is of course exacerbating the possibility of a short term suckers' rally in the market over the next couple of months. It's like the cargo-cult mentality, the market will come to expect rates cuts as being a "Fed-given" right, and drive stocks up both before and after the next cut (as we have witnessed from today's cut) - more tulips??? The stock market being a progressive zero sum game in the short term, I sense significant wealth re-distribution among US stock investors in the months ahead <vbg> Best, Steve

To: Bosco who wrote (7527)	11/17/1998 7:52:00 PM
From: Ramsey Su	Read Replies (3) \| Respond to of 9980

Bosco, Rape of Naking is a pretty good book. The part I like the most was her research into how the Japanese soldiers were trained in a manner to make the "rape" possible. Changing subject, please don't impeach Clinton. We may end up with the total idiot Al Gore. What he did in Malaysia is an embarrassment for all citizens of the US. It is not whether Mahatir is doing the right thing or not but using the APEC forum for these mindless irresponsible statements is inexcusable. How do we impeach a vice president? Ramsey