Chapter 1. Introduction


“In War more than anywhere else in the world things happen differently to what we had expected, and look differently when near, to what they did at a distance.”

 --Carl von Clausewitz[1]

Federal Reserve Rate Cut Announcement

At approximately 1:14 in the afternoon of January 3, 2001, the Federal Reserve announced a 50 basis point cut in the targeted Fed funds rate.[2] The announcement was intended to surprise market participants, and it did—coming almost four weeks before the next regularly scheduled meeting of the Federal Reserve Open Market Committee on January 30, 2001. The impact on the stock market was immediate. Stock prices rose sharply in reaction to the news. Many large Nasdaq-listed stocks soared. JDS Uniphase closed ...

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