4 replies to this topic

[redfoliage2]

Today two Federal Reserve officials said unexpected economic growth could prompt an interest rate hike. My take on their comments: The FEd does not want to deal 2 bubbles at the same time so they are not going to continue to support a stock market bubble. Afterall, they are not world class jugglers.

Edited by redfoliage2, 09 February 2007 - 02:23 PM.

[arbman]

Read my post below, the housing bubble is a more economically important bubble in terms of asset prices, a correction in the markets though is much easier to inflate back since the housing will create new jobs and lower rates will have the compounding effect on the growth. The Fed will not raise the rates, they are simply saying to the markets that they will slow down the economy in order not to pop the housing bubble ahead of the 2008 elections... - kisa

Edited by kisacik, 09 February 2007 - 02:20 PM.

[S.I.M.O.N.]

Today two Federal Reserve officials said unexpected economic growth could prompt an interest rate hike. My take on their comments: The FEd does not want to deal 2 bubbles at the same time so they are not going to continue to support a stock market bubble.

the us stock market is currently undervalued by as much as 20%.
You would have to resort to some extreme perma-bear valuation tools to call the current market a bubble.

[arbman]

Could it be that the valuations are looking ahead and predicting a much tougher growth environment? I think so. No it is not a bubble, that's why I think it will be much easier to inflate back up once the rates go lower, in fact it will probably explode to the upside. But, a housing spiralling down will pull the entire economy with it, imho. One thing to pay attention here is the decline in of the dollar in the afternoon despite the rising rates and declining stocks. The Fed can not cut the rates yet, I am thinking there is not enough money to absorb the supply either, isn't this the recepy for a correction? - kisa

Edited by kisacik, 09 February 2007 - 02:27 PM.

[steve]

I think the Fed is unhappy about the inverted yield curve and is trying to "jawbone" the market for higher long term T-Bond yields