while I agree any more cuts = significant moral hazard, I am warry of the fed's willingness to prostitute itself in the name of our capital markets...
Moral Hazard, Prostitute, ... Thats silly talk.
Fed is doing their job. Maintaining price stability. They stepped in during the crisis situation, but now the crisis part is over. Markets will just have to readjust expectations to slower growth and sluggish profits, and better lending standards.
On the other hand corprate profit margins are getting squeezed due to higher input costs, thats where the no rate cut comes in. Once again the Fed's mandate is to provide price stability and market stability.
Maintaining the currency stability isn't Fed's job, but they are very mindful of it too. And they can't risk sudden fast moves in the currrency, that will be also destabilizing to the economy.
Since we don't have crisis, there will be no 50 bp cut. I actually think 25 bp cut is also pretty questionable here, but possible.
Gold has no long term demand, except maybe for bling bling in India.
In any case if the Fed doesn't cut its good news for the dollar and bad news for gold and oil. Thats why I'm taking a risk that Gold and Oils will go down on the news.
Edited by ogm, 31 October 2007 - 11:17 AM.
