Worry when there IS certainty in the crowd? What if NO rate cut at all?

[crgarcia]

I believe the rumours of the rate cut have been initiated by Jim Cramer, and troubled homebuilders. What they both really know about investments?

The market has already discounted (went up) a rate cut.

I'll await the Fed meeting statement, ready to pull the trigger with some put options, if there's no rate cut at all.
If there is a cut, I'll just click "Cancel". There is no point being bullish when the crowd has already being so.

 

[hbiawos]

Quote from atticus:

There has been a shadow-cut in rates, reflected by the 5.15 handle on the Oct FF futures. The Fed will trade in-line with market rates in cutting .25.

Are you saying the Fed is obliged to cut according to what the FF futures reflect?

 

[crgarcia]

Quote from hbiawos:

Are you saying the Fed is obliged to cut according to what the FF futures reflect?

Exactly!

Finally some common sense. Futures reflect market expectations.

The Fed isn't obliged to follow anybody guidelines, not even the President (at least in theory).

 

[atticus]

Quote from hbiawos:

Are you saying the Fed is obliged to cut according to what the FF futures reflect?

No. I'll let my position talk. The Fed will cut 25bp. The 2007 FF contracts will drop at least 7 ticks on the decision.

 

[atticus]

Quote from crgarcia:

Exactly!

Finally some common sense. Futures reflect market expectations.

The Fed isn't obliged to follow anybody guidelines, not even the President (at least in theory).

I am open to a wager on the outcome. You're stating no cut. I am awaiting your action.

 

[hbiawos]

The Fed isn't obliged to follow anybody guidelines, not even the President (at least in theory). [/QUOTE]

That's always been my understanding....

 

[hbiawos]

Quote from atticus:

No. I'll let my position talk. The Fed will cut 25bp. The 2007 FF contracts will drop at least 7 ticks on the decision.

Okay. Posted before I saw your reply.

 

[atticus]

Quote from atticus:

No. I'll let my position talk. The Fed will cut 25bp. The 2007 FF contracts will drop at least 7 ticks on the decision.

DEC will drop at least 7.

 

[dhpar]

Quote from crgarcia:

Exactly!
Finally some common sense. Futures reflect market expectations.
The Fed isn't obliged to follow anybody guidelines, not even the President (at least in theory).

that's correct - in theory.

this time it is a bit harder for fed though - you could say that they are obliged to correctly manage market expectations. And despite they wanted to avoid this responsibility (by saying they want more data up until the meeting) they did not manage it well in their speeches.
despite Lucas theory being influential among economists it is not Fed's philosophy. Fed does want as least surprises as possible.

ther rest of this thread is ridiculous and stupid.