That makes sense, didn't think of it. Cheap doesn't mean available. Another angle. If you do get it you won't need as high rate of return from it. If you put it into a business you would be able sell your goods at a lower cost because of the low dept service. That would make you more competitive than a competitor that had borrowed a year or two ago at a higher rate. Also seems like it would accelerate the recovery once it begins but it hasn't yet. Like you said, they're not buying.
If 475 bps of cuts haven't helped, what is 25 or 50 more going to do? Would any of the big investment powerhouses on Wall Street have predicted such a sluggish economy 19 months into a FED easing cycle? I doubt it. Also, for what it is worth, Larry Kudlow use to say a good rule of thumb is the FED funds rate 75 bps below the 2 year note. A 1.25% overnight rate? The credit markets are telling you that this economy is alot worse than people think. If the economy is so hot, why did the 30 year bond fall to its lowest yield of the year today (a 10 month low)?
Ofcourse it isn't going to help! But we all know that if the Fed does cut, there will be a spike up as a result. And as traders that is what we are ultimately concerned with. btw, the long bonds may be telegraphing inflation (but then again what do I know?).
Hey Fed you want to get me to spend more money ??? Raise interest rates 475 basis points so I can get over 6 % on my Cd's then I will spend the 4 % difference over what I am getting now Shit I am debt free I don't care about low interest rates I want em high!!!
Whatever the fed announcement comes out, the first 5 min after announcement will shake out traders(Up & Down, Up & Down....) After that, we will see a trend for a while either up or down. And before closing the market, the reversal will be occur. Play it smart.
the only way to play the FED is to watch for the fake out moves on extreme ticks ... then , you have a chance by fading ... but even so need to keep it close to the vest ... in case you are dead wrong
Last week, I was the only one to go out on a limb and say no rate cut. At this time, the consensus was for a rate cut. This week, now this thread becomes popular with babak-come-lately's, now saying there will be no rate cut. Duh? Yes, this week, the consensus has changed, and it is evident by the new responses. My point is: it's easy to go with the herd, but difficult to buck the crowd and form your own opinion. Due your own due diligence, and learn from your mistakes, and you will be best off going from the gut. Vinny
In reality the economy is getting worse and we have a brewing banking crisis with all the bad debt out there. Rates are already historically low. If the fed wants to increase money supply in this environment, they must use open market operations. They can drop the price of money to zero, but I know of very few people that can really take on more debt right now, and those that can are not interested due to future earnings prospects.
Hey Fed you want to get me to spend more money ??? Raise interest rates 475 basis points so I can get over 6 % on my Cd's then I will spend the 4 % difference over what I am getting now Shit I am debt free I don't care about low interest rates I want em high!!!----Musicman I nominate you for Fed chairman.