14 replies to this topic

[atlasshrugged]

I dont have a clue any more!!! I was long at these prices last week and we got crushed after the unemployment report but now we rally back... Here we sit again

[nimblebear]

neither do I. but see my post above. no cut might be a good thing.

[SandStorm]

I will bore you with these. We have always been preoccupied with what solution the Fed should come up with in order to avert a recession. But I can't help but wondering if natural business cycle isn't actually a healthy thing. Everytime we intervene this monster of consumption that is US grows larger, sucking up everything and around the world. Is it any wonder then that global imbalance exists today? We are missing forest for the tree. Anyway, I think Ben will give us a small 25 bps cut. That will be the hint that he disagrees with the concept of perpetual growth so envisioned by his predecessor.

[arbman]

They can not allow a deflation when there is so much debt, I suppose. I think the Fed will try to slowly inflate to keep the market in a trading range at least...

[fib_1618]

At this point, the market's are only expecting a 1/4% cut in the Fed Funds rate on Tuesday, and this has already been discounted. The real question, however, will be with the Discount Rate, where we might see a cut of up to 1/2% in the Fed's attempt to bring it more in line with a more accommodative policy on a historical basis. Fib

[SandStorm]

They can not allow a deflation when there is so much debt, I suppose. I think the Fed will try to slowly inflate to keep the market in a trading range at least...

Agree. I realize we are indeed in a tough spot. But consider this. By postponing even further we might later be in a sh* hole. Our government can't stop spending. They've got two huge liabilities coming up - ss and medicare, unless there can be sweeping reforms. It's up to us the consumers to start spending a little less and save a little more.

[atlasshrugged]

At this point, the market's are only expecting a 1/4% cut in the Fed Funds rate on Tuesday, and this has already been discounted.

The real question, however, will be with the Discount Rate, where we might see a cut of up to 1/2% in the Fed's attempt to bring it more in line with a more accommodative policy on a historical basis.

Fib

Fib,

I respect your opinion...do you think we test the lows from August or not?

[SandStorm]

At this point, the market's are only expecting a 1/4% cut in the Fed Funds rate on Tuesday, and this has already been discounted.

The real question, however, will be with the Discount Rate, where we might see a cut of up to 1/2% in the Fed's attempt to bring it more in line with a more accommodative policy on a historical basis.

Fib

Discount rate is more surgical than the Fed funds. I hope Ben will use it and only if liquidity crisis worsens.

I think a 25 bps Fed funds cut will be Ben's way of saying "no way Jose a slow down is actually good for you," and that's only becacuse we have been barking at him rudely. Without it he might not even cut. Well, time to find out if he is a politician or a true academic.

[dasein]

I really dont know what the fed will do because this is a tough juncture. IIRC the ECB and BOE recently changed their stance from continued raising to keeping rates the same. I think this was arranged with the US to make sure the dollar does not tank with an upcoming rate cut here. I do think Ben would rather keep rates same, but he may have to give the 25bps to show he is aware of the credit problems and ready to ensure the economy does not implode. Poitical pressure, and maybe treasury pressure, is too great. Nonetheless, I would say the FF traders are underestimating the chance of the fed doing nothing, my odds are more like 50-50 at this point, and for sure he will make a comment if he cuts, that the cut is a resonse to current exaggerated weaking and probably temporary in nature. klh

[fib_1618]

do you think we test the lows from August or not?

Since the top in July, the internals of the market have been suggesting a trading range, with an initial downside price objective of the March 2007 lows. To this juncture, we have fully met the lows forecasted, and there's been nothing of substance as yet to deviate from this larger trading range idea.

My initial opinion based on what the market had given us to work with was that this trading range could last as long as the next nesting of the 9 month cycle due in December. However, there have recently been indications that we could have another 9 month shift upon us - which wouldn't be too surprising if we're in a still larger parabolic bull move to the upside as these same internal whispers have been saying for quite a while now.

So to answer you question, sure, we might "test" the lows of August, but I would put this as a very low probability at this time because of the high degree of liquidity that continues to buoy not only the US markets, but on a global scale as well, and I would be looking more towards a triangle pattern tracing out given the fundamental undertone that we're dealing with at this time than anything dire.

Well, time to find out if he is a politician or a true academic.

Actually, he's both. It's called an economist.

Fib