Post FOMC Market Action

[drsteph]

for the cynic in us,

a pause would send the djia soaring...

a raise would keep things flat.

How do you get more than a 50 pt drop by the close (except for the obligatory 99 point drop in the djia followed by the 49 point short cover like last time)?

if not this time though, then the next.

 

[steveosborne]

Quote from drsteph:

for the cynic in us,

a pause would send the djia soaring...

Normally it would but inflation concerns is what has been driving the bond market down in April. Another leg down in bonds and the dollar would definitely bring stocks down.

 

[steveosborne]

That statement was a big mistake. They should have said <b><i>the extent of such firming</i></b> instead of <b><i>the extent and timing of such firming</i></b>. My explanations:
http://elitetrader.com/vb/showthread.php?s=&postid=1066904#post1066904

 

[ksonsinc]

What a beautifull Day
Tho i was shit scared shitting in my pant
I had a beautifull Day

 

[myminitrading]

Quote from steveosborne:

Based on the information shared with(through) Maria Bartiromo a few days ago and how markets reacted afterwards, they will probably find a way to tell us that a pause in June is less likely to happen than what has been priced in inflation-risk premiums and FX rates.

If it's the case, the inflation-risk premium will go down, pulling bond prices up in the process.

CPI & PPI next week should dismiss any notion of a rate pause. Just look aT energy and metals. But this goverment may just fudge the number sort of like WMD.

 

[Pabst]

Great comments Steve. As usual. Very similar to 1987. Dollar weakness, rising rates, and parabolic up move in gold. Stocks could only stay in their own little world for so long.....

Quote from steveosborne:

Normally it would but inflation concerns is what has been driving the bond market down in April. Another leg down in bonds and the dollar would definitely bring stocks down.

 

[EqtTrdr]

Quote from Pabst:

Great comments Steve. As usual. Very similar to 1987. Dollar weakness, rising rates, and parabolic up move in gold. Stocks could only stay in their own little world for so long.....

disagree...

as long as USD moves down and gets crushed all assets across all classes will continue to inflate....

The fed wants to pay off US debt with worthless dollars all the while making the public perceive they are getting "rich" as the Dow hits "new" highs... imo

 

[steveosborne]

Thanks Pabst. I also noticed the same parallel. Stocks have either topped this week or will do so in a month from now if bonds survive the FOMC statement blunder and rally for a few weeks like they were set to do, before resuming their downward trend later in June.

 

[Pabst]

I agree that if the dollar did indeed plunge, there would be asset appreciation as measured in, dollars! Clearly the three year bull has been correlated to dollar weakness. But have the Dax, Cac, FTSE, and Nikkei's rallies been tied to their respective currency's strength? Since I'm not a macro bear in the Dollar, (I shorted 135's early last year) I don't see your scenario. http://www.elitetrader.com/vb/showthread.php?s=&postid=662269&highlight=euro#post662269


[/i]

Quote from EqtTrdr:

disagree...

as long as USD moves down and gets crushed all assets across all classes will continue to inflate....

The fed wants to pay off US debt with worthless dollars all the while making the public perceive they are getting "rich" as the Dow hits "new" highs... imo

 

[moo]

Quote from EqtTrdr:

as long as USD moves down and gets crushed all assets across all classes will continue to inflate...

Maybe in theory, but in practice inflation has always been deadly for stocks.