Next week Fed cut?

Discussion in 'Economics' started by Mugshot109, Sep 14, 2001.

  1. Does anyone else believe that there is a will be a fed cut next week? I have been listening to a few analysts who believe it is an almost certain move to compensate for any sell off due to the WTC collapse. I have also heard one speaker say that there are a group of firms that will bid the market up as a show of solidarity monday morning. I don't know if there is any truth to this. Will the systems be up to the task of handeling the large volume that will result if this occurs? I would hate for the market to go down while I'm long 10,000 shrs.

    I don't mean to think of making money when thousands of people in this industry have died, but bills and mortgage payments are not taking a break from this, we must make a living.
  2. I posted a small piece that not many seemed to see on the don't short when we open thread be patriots or something like that about how 80% of the time market's rise higher after just a few days.

    Take a look at history with this attachment. Here is more proof about markets going higher. I am not sure how much of the downside is left some of the foreign indexes have already turned positive -I'd be more cautious about shorting especially if you are a swing trader.

  3. tntneo

    tntneo Moderator

    who knows about a fed cut..
    However. let's realize it is very likely and probably needed soon anyway.

    history does show a positive bias after all the selling is done. well, of course, there is no other way than up when noone is selling anymore.
    The selling could be fierce though, really nasty. This will be a turning point in the market because basically, the market will change hands (for the medium term holders).

    However, the bottom might not be on the first day. I really doubt it. Simply to much rebalancing is needed. Let's be professional. As a trader I offer liquidity to the market and accept risk in exchange for reward. So trading should still be considered in the right perspective. If you want to donate money that's not the way to do it, if you want to help, that's not the way to do it. Trading is trading, long term investment is something else ( I do and separate the two for myself).

    As a trader I am willing to offer liquidity but we'll keep my commitment to intraday.
    I expect trading to be sketchy and tough anyway. Technical infrastructure on the electronic side is not a problem or not much I think. However, opening NYSE is tricky because of the human aspect. I hope it will be alright.

    I think it is appropriate to open US equities only monday. But further delay may send a very bad signal to markets everywhere including to US investors. Monday was a good choice, but no later.

  4. Babak


    a reduction in Fed Fund rate will take a long time to work its way through the system. A much more appropriate response is to inject short term liquidity into the markets, which the Fed has already done (around $30B and $68B the next day).

    The Fed may very well reduce rates, however it is suspect if they are doing so because of the state of the economy or whether it is to support the shock the markets will go through.