75 bp cut
- Thread starter kashirin
- Start date
or Planning more cuts?
25 bp lag Fed is more worried about dollar strength
Akuma
Akuma
Lets see, CITI BANK is bankrupt, but now the Arabs bring in a second installment of cash, to save CITI, or basically buy CITI BANK.
How many other banks do you think, if you able to read between the lines, are close to if not bankrupt, on the books.
Now here comes the fed, cuts 75 basis points to create a wave of cheap money.
Which way do you think the smart money will bet after the idiot day-traders go long the surprise?
Which way, now think very hard, do you think the market will trend, after the noise and volatility settle down from such a cut?
Now, think real real real hard, the chances of the fed cutting 75 basis ? Please do not repeat the Fed Fund Rate because that indicator is out the window.
How many other banks do you think, if you able to read between the lines, are close to if not bankrupt, on the books.
Now here comes the fed, cuts 75 basis points to create a wave of cheap money.
Which way do you think the smart money will bet after the idiot day-traders go long the surprise?
Which way, now think very hard, do you think the market will trend, after the noise and volatility settle down from such a cut?
Now, think real real real hard, the chances of the fed cutting 75 basis ? Please do not repeat the Fed Fund Rate because that indicator is out the window.
Some of the results of a 25bp cut are overstated here - recall that the Bernanke fed is multifactorial in their responses to the debt and equity markets and have clearly stated that they have more tools than simply lowering rates. We have seen some of those tools by virtue of the discount window, repos, and the acceptance of toxic debt as collateral, thereby effectively monetizing (sterilising?) that debt.
President's working financial group also a part of that strategy. Money borrowed at the discount window can either be lent out at a profit or used to buy equities/futures in the market to maintain asset values.
With these tools, there is no reason (at this time) for a surprise or severe 50bp or more cut. It is more important to maintain order - the timing of things and reduction in volatility is likely felt to be the most important thing to stave off a financial crisis - it gives time for people to adjust & corrective rallies or declines to occur which also breaks the severity of any move.
You may not like it, but call it what it is -a traffic cop policing the markets.
25bp cut at end Jan.
President's working financial group also a part of that strategy. Money borrowed at the discount window can either be lent out at a profit or used to buy equities/futures in the market to maintain asset values.
With these tools, there is no reason (at this time) for a surprise or severe 50bp or more cut. It is more important to maintain order - the timing of things and reduction in volatility is likely felt to be the most important thing to stave off a financial crisis - it gives time for people to adjust & corrective rallies or declines to occur which also breaks the severity of any move.
You may not like it, but call it what it is -a traffic cop policing the markets.
25bp cut at end Jan.
Interest rate cuts dont mean market rallies. Ak 2001.
Interest rate cuts means that the economy is in trouble.
Banks will not trend reverse on interest rate cuts as risk to there assets increases from trouble from the economy.
THE STOCK MARKET IS IN TROUBLE.
A fall in the stock market will confirm and support a recession.
MY PICK : short china, Japan, and Brazil stock markets.
The next big shock will come from the BLS, as they must reduce the influence from the births and deaths model in there jobs numbers ( this model has been 80% of all jobs for the last year).
So watch the weekly job claims ....
I see red, I see red, I see red. ( c/- Split Enz)
http://www.lyricsdownload.com/split-enz-i-see-red-lyrics.html
Interest rate cuts means that the economy is in trouble.
Banks will not trend reverse on interest rate cuts as risk to there assets increases from trouble from the economy.
THE STOCK MARKET IS IN TROUBLE.
A fall in the stock market will confirm and support a recession.
MY PICK : short china, Japan, and Brazil stock markets.
The next big shock will come from the BLS, as they must reduce the influence from the births and deaths model in there jobs numbers ( this model has been 80% of all jobs for the last year).
So watch the weekly job claims ....
I see red, I see red, I see red. ( c/- Split Enz)
http://www.lyricsdownload.com/split-enz-i-see-red-lyrics.html
I'd think 75, because as I have noted before, this is an election year, and if the Fed feels like they need to do a lot of easing, they will want to get it done before the election season is really under way, so as to maintain political neutrality.
50 may be the necessary compromise, because of the parlous state of the dollar.
All kinds of symbolically important stocks are getting the living crap beaten out of them: INTC, GM, C, to name three. The collapse of the techs is especially disconcerting, as they qualify as cyclical plays, and they're trading like a deep recession is baked in the cake.
Given that, the Fed will want to go lower than neutral, and that means 50, which will put them at 3.75, 25 below the low end of neutral. 75 if they want to get it done before the election season gets truly serious.
50 may be the necessary compromise, because of the parlous state of the dollar.
All kinds of symbolically important stocks are getting the living crap beaten out of them: INTC, GM, C, to name three. The collapse of the techs is especially disconcerting, as they qualify as cyclical plays, and they're trading like a deep recession is baked in the cake.
Given that, the Fed will want to go lower than neutral, and that means 50, which will put them at 3.75, 25 below the low end of neutral. 75 if they want to get it done before the election season gets truly serious.
Anyone care to guess how much is already priced in to bonds? E.G., if they only cut 25 will bonds tank because 50 is already priced in?
More than 0.5 is very rare hasnt happened since 1994 i think.
Even after 9/11 greenie only cut 0.5 at a time.
Even after 9/11 greenie only cut 0.5 at a time.