I think it is not as bad with US savings - people save in stocks and houses rather than under the pillow - and all this IS NOT officially counted as savings. Of course higher rates can only help. By the way I do not believe the market will fall - there is simply too much money around and after all the valuations are not ridiculous. In any case I do not trade much equity beta in US - only alpha - I do beta elsewhere (Asia).
The volatility and 100 point comeback was impressive. Guess it shows the ISM number and prospect of a beneficial / detrimental rate cut looming can be interpreted differently by both camps. One thing is clear, there is a serious battle going on at these levels and one side will make a stand before year's end.
Honestly, I think the best move the Fed can do at this point is exactly what they're doing - not moving and citing inflation as a boogeyman. The market believes cuts - that's right, multiple cuts - are coming early next year. They've just gotten done pricing it in (100% chance of cut). When it doesn't happen, there will be a serious turn around. Regarding the EuroZone, just saw some news beginning on how EZ car makers have to take a price hike now in Japan, and Japanese auto makers now are pushing their advantage in Europe. This is the beginning of an export hit the EZ will feel very closely. The 100 or so members of the ECB are all a bunch of kooks thinking that they're not going to feel a high euro and that they can just keep tightening rates. Aint gonna happen...maybe one and done?
You dont here much talk about the deep inversion in the yield curve, it is getting deeper every day fed funds 5.25, ten year 4.42 thats a .83 inversion. If their is a slow down it wont be that severe, nothing like 2000-2003
I am not 100% sold on this one - you can "talk the talk" for very long before people start see you are really not that serious about it. The inflation is above their soft limits for how long now? 2 years? and the monetary restriction? There is simply none (sic!). Of course you can always say "I am focused on medium term" and within that time frame all will be fine - but you can't say it indefinitely... I do not believe Fed is serious - and "I want my pay-raise to cover for that uncertainty" - that's what's happening...
Given the rapid falls this week, wasn't the late rally today possibly due to short covering/profit taking ahead of the (uncertain) weekend? If someone has access to S&P futures volumes, maybe heavy volume late in the session would confirm this. Grant.
My theory is the Fed will lower interest rates to keep the consumer going. The military will be used to make sure the world keeps buying dollars.
I think you are on to something there! Feds choice is to A)save the dollar...raise rates B)save the consumer....lower rates. B is the most likely choice for the Fed as this will keep the economy going,falling buck will be good for export trade...imho
INTERSTING POINTS RASIED HERE. I AGREE WITH YOU THE FED IS F.......ED. WHAT CAN THEY DO.COME OUT AND SAY THE PARTY IS OVER. THEY ARE POLITICIANS AND WILL NOT ADMIT THE TRUE STATE OF PROBLEMS UNTIL ITS RIGHT IN THEIR FACE.BY THEN IT WILL BE TOO LATE. GREENSPAN CAUSED ALL THESE PROBLEMS BY ALLOWING CREDIT TO GET WAY OUT OF CONTROL.EVEN NOW THERE IS TOO MUCH MONEY ABOUT. CUTTING RATES WILL ONLY GIVE THIS PROBLEM A SHORT TERM RESPITE. IM NOT A CONSPIRACY THEORIST BUT YOU HAVE TO ASK YOURSELF WHY THE DOLLAR IS NOT 25% LOWER AND THE STOCKS ARE 25% LOWER. PERSONALLY I DONT THINK THEY CAN LET THESE GO. THEY CANT AFFORD TOO LET THEM GO.THERE IS TOO MUCH AT STAKE. THIS IS FINANCIAL WARFARE ALMOST. THE MARKETS PRICING SEVERAL RATE CUTS AND FED OFFICIALS PAID BIG SALARIES AND HIGHLY INTELLIGENT ARE SAYING THE OPPOSITE. THIS IS GOING TO BE AN INTERESTING YEAR NEXT YEAR THATS FOR SURE. ON ANOTHER NOTE LOOK UP THE EXCHANGE STABLISATION FUND RUN BT THE US TREASURY. IM SURE THESE GUYS INTERVENE CONTINUALLY IN THE MARKETS TO PROP UP STOCKS ETC