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 : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: J. P. who wrote (6254)	2/12/1999 8:24:00 PM
From: James F. Hopkins	Read Replies (2) \| Respond to of 99985

J.P.; I'm sure you can find someone better than me to explain it, I have not made a study of the mechanics of it all. (1) It effects what the fed funds rate trades at. ( right now they say the Fed has a 4-3/4 target rate..how they set it or why they change it you have to pry out of GreemSpam. (2) The fed funds rate effects what it cost big futures players to leverage. (3) The fair value you see on CNBC concerning futures is theoretical, as the cost of money is not the same for all the players, bigger players get money cheaper, but when your leveraged and we are talking about a lot of money a small change in the fed rate can mean a lot. (4) Fair value can actually change during the course of the day , it's not a fixed thing. But it is tied to the fed funds rate. -------------------- So in effect the add liquid , or drain liquid effects the futures traders, which in turn effect the stock market. Arbitrage players sell futures buy stocks, or buy futures sell stocks, all on that Fair value , which is tied to the Fed fund rates. Exactly how it works I'm not sure but I have noticed a lot of correlation. More lately than I think it was not so long ago, however I don't have data tracking it, it's a seat of the pants thingy with me. ------------------------ But when he drained liquid two days in a row, it wasn't long before you saw the market start down, and it took 5 days to undo taht, but then all it did was give a bounce the 30yr bond just broke support, but damm it de-coupled from the dollar too..now I have never seen that in all my watching, the interest rate going up and the dollar falling, I don't know what it means but I don't like the smell of it. Jim