Discussion in 'Wall St. News' started by crgarcia, Mar 16, 2008.
10 year T-Bonds yield 3.42%.
So they can get a loan from the Fed at 3.25%
That is 0.17%. This may not sound much, but it's risk free and without using your own money.
Besides the Fed will cut further on March 18.
I think the new facility for the primary dealers and the 6 month term is a much bigger deal than a lot of people (at least on ET) are realizing. Will be interesting to see what happens.
I think the equalizer to all of this will be an eventual downturn in the European housing market and hopefully a further downturn in the Chinese economy, which according to recent growth reports is already happening. This should help equalize the dying dollar if the Fed will stop relying on rate cuts and does something more proactive with the government to help fix bad loan policy. I thought the next rate cut Tuesday would be 1/4 point but I just heard the news they did an emergency cut sometime today. That makes sense to me, because it will give investors some time to digest it over night. I think Wall Street tomorrow will retreat another 200 points, as I really feel they were anticipating a 3/4 point cut on Tuesday. Maybe analysts will still predict more cuts Tuesday but if that happens, I think I will be even more bearish about this current Fed's ability to act effectively. If they stop cuttting now than hopefully, somewhere around 11,400 will be a bottom in the next 30-days.
I'd like to see the Euro trading at about 1.43 by May and I hope that by the end of the year the Fed can get the Fed Rate up to 4.00% to equalize this commodity inflation they have brought us into with these reckless cuts. Not cutting would have only caused Wall Street to stagnate but I feel the panic cuts caused financial insecurity that did even more damage to Wall Street and commodity inflation from the devaluation of the dollar.
If anyone else agrees or disagrees with my take on this, I'd like to read what you have to write about concerning this subject.
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