Just a question to throw out there how does this rate cut repair the damage in the US economy? Or how does say a 1% cut repair the damage. The markets have flown up on the I see simply as hope. In 87 the markets rallied strongly in the face of higher rates untill the market simply imploded. Here we have the markets rising strongly in the face of record high oil, gold, food stuffs and a falling dollar. So while the situaion is different in that we are cutting here and they were raisiung then the underlying reason for the rise is the same which is unabilty and/or unwillingness to see what is coming it really is starting to resemble a casino with a guy down to his last $100 putting it all on black and closing his eyes.
..that's why most traders lose money! I trade with only 5% of my portfolio..sometimes I win, sometimes I lose. It's recreation, not serious investing.
Its just a bit less that people or corps need to pay if they have loans based on prime rate. It would take a BIG cut to get housing or autos back to normal, but my guess is they are TRYING to engineer a slowdown because commodities have been going nuts. Alex is correct in that if you are trading, the Fed meeting usually causes wild swings, and you never know which way it will go. I'm betting no cut or .25 cut, and bought a crapload of puts to offset my long positions.
well since they cut 50 oil is higher, the dollar is lower and the stocks are lower. banks are struggling, the housing market is still on its knees. if the fed believe rate cuts are the answer then why dont they carry on cutting. i think anything other than a 50 cut will reinforce the theory that they have fucked it. once you go down the road of cutting you have to keep on cutting otherwise dont bother. ultimately here i believe the fed has some tough questions to ask itself. cutting rates is not the answer. debts have to be marked to market not marked to model. rules have to change and fiscal policies need changing. after they probably cut rates tonight in a few weeks the dollar will be lower, stocks will be lower and oil will be above $100 people will start to question why they are cutting?