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Strategies & Market Trends : Stock Attack -- A Complete Analysis -- Ignore unavailable to you. Want to Upgrade?

To: dennis michael patterson who wrote (19801)	3/6/1999 2:41:00 PM
From: Judy	Read Replies (1) \| Respond to of 42787

There are explanations for divergences, even if we don't know the answer. It's a moot point now. So when is Carpino's next update?

To: dennis michael patterson who wrote (19801)	3/6/1999 3:28:00 PM
From: Robert Graham	Respond to of 42787

The spread in part is what the banks and financials are responding to. The long term interest rate went up, not the short term interest rate which is based off of the Fed funds rate. This increased the spread which is essentially the gross profit margin for banks. This means that the banks will be making more money. If the Fed funds rate went up which would be reflected in the short term notes, then this makes it more expensive for banks to do business until they can convert all of their accounts to the new interest rate which takes time. Some accounts many years. If the increase in short term rates were not to be reflected in the long term rates, this would also limit the bank's ability to generate a profit. Also these stocks are responding to the positive outlook on inflation and the anticipation of no near term Fed rate hikes due to an "overheating" economy. If inflation were to enter the picture, this would cut into the profit margin of the bank. If the Fed were to hike interest rates for whatever reason, this would also cut into profits. All in all, a good current picture for the banks. Bob Graham