So what's the Fed going to do?

Discussion in 'Economics' started by The Kin, Sep 15, 2008.

What will Fed do tomorrow?

Poll closed Sep 17, 2008.
  1. Raise rates by 25 basis points to 2.25%

    1 vote(s)
  2. Do nothing - hawking bias

    3 vote(s)
  3. Do nothing - dovish bias

    7 vote(s)
  4. Lower by 25 bp

    11 vote(s)
  5. Lower by 50 bp

    14 vote(s)
  6. Lower by 75 bp

    2 vote(s)
  7. Lower by 100 bp

    3 vote(s)
  8. I don't Know // Jack Hershey has a very fragile ego after a lifetime of failures

    1 vote(s)
  1. Everything Bernanke believes in dictates that he will cut HUGE in tomorrow's FOMC meeting. I bet he could 50 basis points or more. His fellow Feds are going to stage a revolt, and I would not be surprised to see someone resign following the meeting.
  2. dealer


    The only way the banks are going to be able to recapitalize is by riding a yield curve that is as steep as possible. So I think they do 100bp cumulative in the next couple of weeks.

    Look at the breakeven on the TIPS. The have collapses recently. I'm not bond expert, but even if you make allowances for liquidity constraints, the market is saying inflation is not a concern -in fact it's almost as if those bonds are pricing in the slim chance of DEflation.
  3. G-Boa



    Whatever they do doesn't mean anything right now. I voted lower by 25bp because they can take this opportunity or not. If they go the other way, check for brake marks!!!

    Either way one thing is for sure:
    1. liquidity = print more dollars

    Which means:
    2. short this dollar rally short term

    Which incorporates:
    3. Play at your own risk


    You could also have your orders in short asia and europe, long dow & snp as a hedge on the bounce/hedge on asia (subject to change).

    Also, Fed has cash from petrodollar return from the high oil prices the last year+ (treasury/petrodollar exchange business)...anyone watch the 10-yr yield??
  4. the US will have to devalue

    Fed Funds to 0.50%

    DX to 60
  5. No.

    Things are too far gone.

    Bernanke has moved past interest rate policy and into new territory. The old game no longer works, so a new game plan is being re-written as we go along.

    Remember that spike in the 30 yr treas last year in the summer that heralded the credit crisis and ended the goldilocks economy? Had to be a veiled threat from china.

    No rate cut. Hope I'm wrong 'cause I am long treasuries (disclosure) but don't expect a rate cut.
  6. there is no game left, except the end game.

    DX must fall.. there is no other outcome other than raise rates to defend it?

    yea right..
  7. S2007S


    A 50bp cut will cause more panic selling. There isn't much to save the market right now. Dow 10k is coming.
  8. Rate cut means nothing if the banks won't even lend to each other.
    The big event is if AIG can get that $75 billion by tomorrow night.

    Another boat ride tomorrow!!

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  9. But lower rates increase the value of bonds, no matter how shitty the underlying asset. Plus a steeper yield curve is good for banks.
  10. 25bp cut, china cut so why not?, along with SERIOUS talk of fixing something supporting a strong dollar, providing additional support to ailing banks, FKIN ANNOUNCING A DEAL WITH AIG
    #10     Sep 16, 2008