If the Fed does NOT cut the rate on Sept. 18, what are your predications for that day? Mine - Dow down 500+pts
Sept.18 is still long away. Bush will speak on Friday about the sub-prime debacle and he supposedly has a solution. Whatever it is, it will make the market go up like a torpedo. Why do you think the ES printed 1478.50 after hours? That is more than 25 point higher than the closing price. His speech is precisely the reason.
I think that the fed will not cut at all posible costs. He doesn't want to be perceived as catering to the markets. What will end up happening is the he will lower the discount window to 5.25 so that banks will be able to borrow but nobody else. Also I feel the government is going to expand Fannie May and Freddie Mac to help more of the subprime people. Just remember Bush is trying to repair his legacy and Bernanke is his buddy so he will give him the leadway to do it.
I guess that the market will sell as soon as bush speech starts to run (who knows from where 1474-1480-1485), many times it happened, many times will happen again. Of course i'm not trading guessing, i prefer to react to price
The Fed will be managing expectations before then. The Ip article on Thursday was an example. Imo, they'll be lowering expectations for a cut.