Yes, I did - should have been December 1988, an extension of the same tightening cycle.
Believe me when I tell you I remember 1987 as if it was yesterday. As I recall, having served as a Merrill Lynch Account Executive throughout the '80s, the DOW declined approx. 11% between December 86 and March 87, resumed its uptrend to a peak in July (at a backward P/E approaching 28x), fooled around in August and September, then entered the crash of October.
The Bond market began its collapse in the Spring of 1987. Within mere days after the May treasury auction the price bid for newly-issued bonds had declined more than 10% from the par issue value. I recall a ML trader noting over the Squawk Box late one afternoon in September that "retail clients are hitting the bit on the 30-year (Treasury Bond) at 10%." That is, the bond market had entered a steep decline, and individuals were selling their bonds in a panic (and that we should buy from the suckers).
After the truly alarming action of the 4th quarter 1987 - including the 22% decline of Oct 19th - corporate profits continued to rise, and the market steadily rose until the summer of 1990.
A downloadable copy of the 1997 Annual reort can be found here
The chart of reserve balances throughout 1997 is on the bottom of page 5.
Your source had a small math error. In December 1988, Fed Funds hit 8 3/4, not 9 3/4. So you blame the Crash on the tightening cycle? I didn't realize a 1 3/8 rise in Fed Funds can cause a 22% drop in the Dow. How much should a 4 1/4 rise make the Dow fall?
The chart of reserve balances throughout 1997 is on the bottom of page 5.
Thanks. That doesn't look like a 30% drop, maybe 10%. Now how is a 10% drop in required reserve balances to blame for the collapse of LTCM?
And if a drop from $60 billion to maybe $54 billion in 1997 is bad, the $20 billion in total balance requirements at the end of 2004 must be a total disaster.