Fed Raises Discount Rate

[MohdSalleh]

Quote from dtrader98:

One of the more profound observations I came across reading a Quant book on alpha strategies, was that increasing rates is a sign the economy is improving. He showed that contrary to common thinking, as the rates start going up, the market tends to move in the same direction.

Think of how the 1st of a succession of rate 'cuts' often signals an impending crash. If you go back and look through the historical record, you'll see these facts.

Be careful to extrapolate common perceptions.

yes absolutely,i do much much better in a rising rates environment. there is a lot mroe liquidity in the small-mid capsspace which i trade, i noticed when they started cutting rates, liquidity started vanishing

 

[WallStWhizKid]

Improving economy is already priced in the market. Look for triple digit fall tomorrow.

 

[stock piker]

Quote from Illum:

Is discount that important? And ..... Why before expiration day? Some people might get burned by the timing of this.

Bernanke did a cut on the Thursday before expiration. IIRC it was during the LEH fiasco. Obviously the timing is there to f^ck the greatest number of traders.

 

[PaulRon]

Ouchhhh - I'm pretty heavy long gold - thanks for nothing asshole

 

[wmb]

With regards to your idea that raising rates is an indcation that the economy is improving don't you think the fed is trying to make that impression yet it doesnt mean it is improving, my Gosh these guys are as phoney as baloney! The unemployment and forclosures are just 2 signs.

 

[nazzdack]

Quote from dtrader98:
----increasing rates is a sign the economy is improving......as the rates start going up, the market tends to move in the same direction.
----a succession of rate 'cuts' often signals an impending crash. If you go back and look through the historical record, you'll see these facts.
----Be careful to extrapolate common perceptions.

1) That's "true" during a bull market, not a bear market.
2) That's "true" during a bear market, not a bull market.
3) Be careful to extrapolate somebody else's perceptions.

 

[dtrader98]

Quote from nazzdack:

1) That's "true" during a bull market, not a bear market.
2) That's "true" during a bear market, not a bull market.
3) Be careful to extrapolate somebody else's perceptions.

I think if you took the time to research your own comments, you might see that number 2) just signaled the very top of a 5 year bull run.

Please cite your research or provide your own, so we can all agree on the 'facts.'

 

[Pension_Admin]

Quote from nazzdack:

1) That's "true" during a bull market, not a bear market.
2) That's "true" during a bear market, not a bull market.
3) Be careful to extrapolate somebody else's perceptions.

I agree. Interest rate hike may have a different affect on the market this time. Of course, nothing is for sure.

PA

 

[Illum]

Quote from stock piker:

Bernanke did a cut on the Thursday before expiration. IIRC it was during the LEH fiasco. Obviously the timing is there to f^ck the greatest number of traders.

Yea that seems crooked, why not Fri after close or Monday? Maybe Fed just flaunting that what they say is more important than having a free market. Seems like a power trip screw job, even if only subconscious.

Although, this is only the "discount" and CPI should have more effect tomorrow than this. Im prolly wrong though.

 

[nazzdack]

Quote from dtrader98:
.....(2) just signaled the very top of a 5 year bull run.

A) When interest rates are cut, when rates are relatively "high", that can spur borrowing and the market (bullish).
B) When interest rates are cut, when rates are relatively "low", that may not spur borrowing if there is no confidence in being able to pay back the debt(bearish). Nobody borrows, even if rates are ~0%.
C) With the discount rate hike, it seems the FED may be wanting to "lead" the market instead of merely "responding" to it.