The Fed tomorrow
#1
Posted 17 September 2007 - 05:14 PM
#2
Posted 17 September 2007 - 05:33 PM
Does anyone here agree with me that the Fed should do nothing tomorrow. Neither raise, nor lower the Fed funds rate. Then confine their statement to saying "when hustlers and gamblers and traders trying to shave a bit here and a bit there off the economy make a bet they either win or lose. When they win they win. When they lose they lose. The taxpayers do not bail them out when they lose.
That would be a good lesson for those worthless middlemen. Maybe then they would go out and get a job and earn thier keep instead of trying to hustle their way through life.
toni b
What they should do and what they will do is a completely different story. Take BOE for example: two days before lending money to Northern Rock they had stated that they are not going to bail out anyone! Just two days later they lend the money. The problem of course now for the BOE - I believe - will be when other Building societies will come out now (Alliance Leicester for example who lost 30% today) and ask for money too....then the real problem will start. Because I believe they won t lend money to anyone! I am in some kind of debt too, I think I ll go ask the BOE for a loan
Nobody wants to be the reason for the market going down hard. Thats why you saw that kind of reaction from the BOE. I believe the FED does not want to be the reason for the market going down either, so I wouldn t expect much tomorrow, maybe a brief rally if the cut only 25bps and PPI numbers come out in line or slightly worse. Then the next day if CPI will come out high then we can see the market going down.
News around are not so good either at the moment, Northern Rock, Alliance Leicester as well, maybe more to come. E-trade, BAC gave profit warnings just today, Novastar can t pay dividends anymore. Have a look at Bloomberg and read the news.....
Credit Suisse, Citigroup Take Losses on LBO Debt (Update4) Credit Suisse Group, Citigroup Inc. and JPMorgan Chase & Co. are taking losses on leveraged buyout loans to prevent deals from falling apart and avoid getting stuck with as much as $320 billion in debt.
PHH Sale to GE, Blackstone May Collapse as Banks Balk (Update5) PHH Corp., the New Jersey-based mortgage lender that agreed to be bought by General Electric Co. and Blackstone Group LP, said the $1.8 billion sale may unravel as lenders back away from some leveraged buyouts.
So I believe no matter happens tomorrow it will be short lived. Things are not that good, no matter what they say that when bad news are everywhere then this is good news as everybody becomes bearish. Completely different situation, consumers in the UK have been scared and for three days are lined up to withdraw their savings....give it a couple more days and if it continues with another building society saying they are in trouble and then we will see the real reaction.
The problem with the whole subprime situation is that none knows what are the losses, and most investors have no idea what is going on (including me). Thats why you see the overreaction everytime a bank announces it has losses.
Anyway, good trading tomorrow...
#3
Posted 17 September 2007 - 05:38 PM
#5
Posted 17 September 2007 - 06:52 PM
#6
Posted 17 September 2007 - 07:04 PM
Edited by Sentient Being, 17 September 2007 - 07:05 PM.
~ Johann Wolfgang Von Goethe ~
#7
Posted 17 September 2007 - 11:22 PM
#8
Posted 18 September 2007 - 01:36 AM
Edited by pdx5, 18 September 2007 - 01:39 AM.
#9
Posted 18 September 2007 - 07:46 AM
Dec 10-year T-notes this morning are trading -0.5 tick as the market treads water ahead of today's PPI report and FOMC decision. Dec T-note prices yesterday closed slightly lower by 2 ticks in light trade. Bearish factors yesterday included the idea that the FOMC today will only cut by 25 bp and the continued decline in the 3-month Libor rate which indicated that inter-bank lending is loosening up. The main bullish factor yesterday was the continued investor run on UK mortgage bank Northern Rock and the Bank of England's need to reassure depositors once again. The BOE tried to take a hard-line on aiding the banking system during the banking crisis but that has now backfired in a loss of depositor confidence in Northern Rock, providing a warning to the Fed and the ECB that now is not the time for trying to punish financial institutions for taking too much risk or using poor lending or funding practices.
is there ever a right time?
klh
klh
#10
Posted 18 September 2007 - 10:36 AM