Bernanke move may trigger sell-off

Discussion in 'Economics' started by heidegger, Sep 10, 2007.

  1. No matter what Bernanke does it may be negative for stocks.

    1/4 point: not enough. sell on disappointing news.
    1/2 point: already factored in. sell on news.
    >1/2 point: must be worse than we thought! sell!

    USD < 80. Bernanke may leave rates unchanged or even raise.
    Massive sell-off.

    Various FEDheads will be making speeches this week; if we hear "why should we bail out speculators" from any of them look out below.

  2. I agree with everything you said. Whatever happens will be considered bad news.
  3. I haven't seen this much consensus on the negative outlook in a long time.

    Being short equities can be one of the worst feelings. When there is too much consensus in one direction, the market likes to prove the majority wrong.
  4. I agree with you, but you might get a "thank god, now we can go long" rally.
  5. empee


    unless its a bear market, true there are sharp corrections, but we just rallied. As we all know, bear market rallies are wicked.
  6. Sure. But it would probably be quashed by sellers waiting for a rally.

    The market might well go up significantly from here, but it won't be directly because of a rate decision. Some other factor has to come into play. The market's a leading indicator ( re the economy ); if, 6 months down the road the economy will be booming we'll see the market rising in spite of any current readable conditions, but rate cuts per se don't guarantee a boom.

  7. ultimately. it's a Dollar confidence issue.....

    if the USDX takes a multipoint multiday hammering, Benny Boy may have to jack up rates.....
  8. I tend to agree with you, but it's a matter of timing. The majority can be right for a long time before they're finally wrong ( hence trends ). Some analysts believe that when the consensus hits around 80/20 the market's ready for a turnaround.

    I don't like being short either if only because with my broker opening short executions are much slower than longs ( 1-2 minutes vs 2-10 seconds ). There's nothing more frustrating than missing trades and losing $ only because order execution is slow.

  9. Indubitably. Bernanke's balancing a basketball on his nose while he walks a tightrope.