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Lower interest rates equals:
1) money looks for higher rates elsewhere (dollar declines) but if everybody
cuts then stalemate
2) spendthrift consumers spend more because credit is cheaper
3) savers get whacked by lower interest income
4) over-extended financial institutions have credit costs reduced (see
savers - #3)
5) mortgages are cheaper so consumers refinance getting monthly windfall to
spend on more stuff
6) alternative (non-debt) investments appear more attractive e.g. the
TBill/EarningsYield model used by many quants places increased value on same
earnings.
7) the Fed, which cut rates on same day that core PPI was up .4% and new
applications for unemployment remained at low levels indicating robust
economy , is scared sh__less of financial meltdown so don't get too carried
away.
Earl
-----Original Message-----
From: charles meyer <chmeyer@xxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Date: Thursday, October 15, 1998 3:40 PM
Subject: GEN: CURRENCIES AND ECO.101?
>Group:
>
>Would someone be kind enough to refresh my memory on what
>today's move by the Fed will do for(to?) the dollar and the various
>foreign currencies? Lower interest rates equals..........? Thanks
>for any postings.
>
>Charles
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