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Interest rates become investors' guessing game

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Next Christmas someone should market a new game: Interest Rates. The object of the game is to pick the peak in interest rates; not short-term peaks, but them peak. Penalties are incurred for calling the blips, and major losses are sustained for guessing the wrong trend.

Each player is armed with several billion dollars to invest and encounters a variety of calamities: Drought pushes up food prices; Congress decides to enact the infamous "Pork Barrel Act of the Decade," tacking on an extra trillion dollars in new spending; and the Federal Reserve Board discovers that its computer programmer was a plant from the KGB which has completely fouled up the nation's adding machines. Of course, there are other screnarios, too, such as perfect weather and bumper crops, a balanced budget, and a credible Fed. But that's no fun.

Guessing the peak in interest rates has been the biggest game on Wall Street for years. Only a week ago, for example, when rates were screaming upward, some observers were talking about a 25 percent prime rate; now, with some of the major banks peeling 1 percent off their prime, slipping it to 20 1/2 percent, there is talk of a 13-percent rate by mid-1981. It's like the old Wall Street joke: Only two men on Wall Street know for certain which way the market is going next year and they both disagree.

If you want to be one of those seers, E. F. Hutton has issued an "Economics Alert" describing "How to Recognize the Peark in Money Market Rates." What Hutton says you should watch are: short-term business credit, money supply, and borrowed reserves.

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