Dow to end the day (12/16) up several hundred

Quote from Cutten:

A bullet only works once and has no more effect after it's fired. Interest rate cuts on the other hand *maintain* their effect for the entire time they are kept low. It is more like a machine gun with infinite ammunition, than a non-auto with 6 bullets.

Interest rates that are 0% now, and 0% in 6 months, are more stimulative than rates that are 1% now, and 0% in 6 months. "Running out of bullets" actually creates a more powerful stimulus than "saving" them.

In other words, the gun/ammo analogy is possibly the most misleading analogy in the history of finance. Any commentator or central banker who uses it is mistaken.
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True, this is an analogy that a lot of "newbies" tend to make, but don't really understand.

Moreover, the FED has made it clear to the markets that they are ALSO going to be purchasing mortgages and asset-backed securities.

Interest rate policy is not the only tool that the FED has at its disposal.
If you don't understand this, you haven't been watching the FED's balance sheet growing dramatically over the last couple of months.
 
So since my "bullet" analogy is weak, how has Japan's "machine gun" been working since it's overly stimulative?

The fed's moves are desperate and very BOLD moves. The market rallied on the move but we'll have to see if the upmove can be sustained. The rally continues and we're into new territory, if it fails, look for a reversion to the underlying trend...
 
Quote from papasucre:

So since my "bullet" analogy is weak, how has Japan's "machine gun" been working since it's overly stimulative?

The fed's moves are desperate and very BOLD moves. The market rallied on the move but we'll have to see if the upmove can be sustained. The rally continues and we're into new territory, if it fails, look for a reversion to the underlying trend...
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Market is going to continue to surge higher. No need to be overly cautious.
 
I was wrong, didn't think the market would close higher, figuer the sellers would come in after the spike.

But this is just one day, the reality will set in. Nevertheless, the market is climbing a wall of worry, so we could very well trend higher and higher.

This is a traders market for sure, just ride the wave, no matter what direction.
 
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