Now why is the fed cutting rates?????

[myminitrading]

Quote from IluvVol:

You are contradicting yourself. The Fed is exactly NOT micro managing the economy and BECAUSE OF THAT does not care where the market is TODAY, or TOMORROW, or was YESTERDAY. Fact is, credit is still extremely tight, so tight that most banks cannot sell their structured products anymore with more papers coming in every day. Firms need to finance themselves short-term but the banks cannot package those loans/commercial papers as there are no takers. Makes any sense???

Thats pure speculation that banks cannot find buyers for their paper. If they can't their is a good reason.

This is not 1998, commodity prices are extremely elevated and appear to no longer be transitory, the feds main job is to control inflation. How they can cut rates with commodity prices so high is just plain irresponsible.

This credit issue is a smoke screen plain and simple. And were suppose to belive what the banks tell us hahaha.

 

[makloda]

You have absolutely zero idea what you're talking about. Maybe take up a career in journalism like Timothy Sykes. You know, he also retired from trading...

I could see you release a best seller book titled "How the Federal Reserve, Goldman Sachs and other crooks are manipulating the markets and stealing money from the average American". Could win a Pulitzer prize.

 

[S2007S]

Seems the fed job is to fight inflation, but what was the reason again to drop rates by 50bp last month and the discount rate another 50??

Thats right to pump more liquidity into the system. They could care less about inflation and where the dollar is headed.

 

[Equalizer]

Quote from myminitrading:

I can't seem to find a reason why rate cuts are necessary. I thought they were used during market declines, and to control inflation, which by the way is starting to take root.

Some GS trader wants to buy an airport or somethin'

 

[IluvVol]

Quote from myminitrading:

Thats pure speculation that banks cannot find buyers for their paper. If they can't their is a good reason.

This is not 1998, commodity prices are extremely elevated and appear to no longer be transitory, the feds main job is to control inflation. How they can cut rates with commodity prices so high is just plain irresponsible.

This credit issue is a smoke screen plain and simple. And were suppose to belive what the banks tell us hahaha.

I beg to differ. Inflation will run higher no question. Everyone knows that, the Fed, too. But thats not to worry. We can live with elevated inflation, look at inflation historically and thats exactly what the Fed does. It balances pros and cons. Do we want to slide into a global recession but can be proud we watched inflation or do we cut rates now and lower the risk of a huge slight somewhat. Thats the question.

By the way, tight credit is not something I pulled out of my arse. I work as bank trader and believe me tight credit is a serious problem to the economy. Companies finance themselves short term with commercial paper and other short term securities in the rates market, nowhere else. Without this source companies are dead. There was a huge fund SIV fund set up for this very purpose. So, I suggest we put the rethoric aside and look at the facts.

 

[scriabinop23]

Quote from S2007S:

Seems the fed job is to fight inflation, but what was the reason again to drop rates by 50bp last month and the discount rate another 50??

Thats right to pump more liquidity into the system. They could care less about inflation and where the dollar is headed.

the fed has a hand in stabilizing markets, which in their view if not attended to can cause contagion negative effects in the broad economy.

of course, job #1 is formally 'price stability maintenance' (keeping inflation away).

We'll see who's the bitch today - the equity and credit markets or Bernanke. I'm cheering for Bernanke to either hold or if he cuts 25, to say 'hey market. this is your last cut - oil is too expensive', probably in more obscure language.


If he cuts 50, I'll have to move to another country.

 

[IluvVol]

Quote from myminitrading:

Thats pure speculation that banks cannot find buyers for their paper. If they can't their is a good reason.

This is not 1998, commodity prices are extremely elevated and appear to no longer be transitory, the feds main job is to control inflation. How they can cut rates with commodity prices so high is just plain irresponsible.

This credit issue is a smoke screen plain and simple. And were suppose to belive what the banks tell us hahaha.

you are stupid or blatantly ignorant. But for a fact you do not know anything about fixed income markets.

 

[stock_trad3r]

Quote from myminitrading:

I can't seem to find a reason why rate cuts are necessary. I thought they were used during market declines, and to control inflation, which by the way is starting to take root.

because the financals are still weak the the housing market

this fed is savvy and will cut rates

he will cut them as low as 3 if he has to and the dow will crosss 18,000 in the process

so much $$ to be made

so easy

 

[makloda]

Quote from S2007S:
Seems the fed job is to fight inflation

That's half of the job description. The full one reads

The stated goals of the Federal Reserve Open Market Committee are to maintain price stability and sustainable economic growth.

So what do you do if your market models and research suddenly shows that growth risks outweight inflation risks? Do you keep fighting inflation and take a risk of a very deep recession in the next 12-18 months (that once its unleashed is impossible to stop with "late" cuts) or go for the lesser evil.

 

[gnome]

Quote from scriabinop23:

"... of course, job #1 is... keeping inflation away..."

That's the perception the Fed and Gummint WANT us to have.

In reality though, the Fed's REAL purpose is to PROMOTE INFLATION.. better yet if most of us don't realize it.