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To: Kailash who wrote (15758)	2/17/1999 10:09:00 PM
From: Gersh Avery	Read Replies (1) \| Respond to of 44573

Kailash I'm not really the specialist. I just noticed a coincidence. I've tried several times, with no success, to find a record of all of the adds and drains that the fed has done. I lack the data to put out the correlation. This is a liquidity driven market. If there is liquidity it will go somewhere. Or at least that's the way it used to be. Anyway .. with the liquidity viewpoint: The fed could be viewed as the source of all liquidity .. as the source they would control the availability of the overall US market to go up or down. This would only hold true during a mainia in which every single penney which could be is being invested. Then we could look at it from the demmand side of liquidity. Say that several institutions decided to lighten their stock holdings. The resulting cash is now in the reserves of the banking system. The fed, seeing excess liquidity pulls some back to maintain the ballance. In this case these maintaince actions by the fed would be the footprints of large fund movements. So is it the chicken or the egg? Does the fed action cause market action or does market events cause a reaction from the fed. It could be neither .. but I think that there has been to many times that the fed has drained several days within the same timeframe and the market took a fall to say that it's only a coincidence. Just my opinion. The remark about fed adding permenant liquidity today was based on the report on CNBC today. Gersh