Rate cut 50 basis points market falls No rate cut Market falls. Think about it, if the Federal reserve cuts by 50 basis points next Tuesday many will come to the conclusion that this economy is a lot worse than it looks. They may cheer the initial rate cut going into the close on Sept 18th sending the market up 1-2%, but weeks later many will realize that a 50 basis point cut wasn't the way to do it. The dollar will fall extremely hard and gold may rally past 800 by the end of 2007. Also keep in mind that inflation is still here and with a 50 basis point cut could only mean more inflationary problems in the coming months. Pay real close attention to PPI and CPI. No rate cut and the bulls will cry and send the markets down 1-2%. I predict no rate cut, if CPI and PPI come in too hot expect NO RATE CUT ON SEPTEMBER 18th. IFFF and its a big IFFF the federal reserve does decide to cut rates its only going to be .25.
For an uncertain outcome where the probability is 90%, you sure couldn't tell that from reading the above poll results. This is somewhat confusing. Anyone have any explanation as to why ET is so closely divided on an outcome that's suppose to be 90% certain?
Imagine if they actually told us that inflation was going up...Would the sheeple even believe it? Have these guys looked at $GSCI in the last 4 years? A token cut of 25, with the promise of more, will prolly be good to the equities, but only, as you say, for a short while. The economy is like a barrell of apples...you pull out one apple with a worm in it, you know there are gonna be more rotten apples in the there...
Doesn't the fed usually take its marching orders from the fed funds futures and if the futures are wrong then fedspeak guides them to where the fed really stands?
What ever happened to the fed moving rates that meant something. During Volcker, and early Greenspan, they used to move 50-100bps.
Don't worry PPI,CPI will be massaged to support what wall street wants. Here we have oil at new highs, along with other soaring commodity prices and the fed is going to cut to support the stock market, simply insane.
Seriously, do you guys even know who's the biggest players in the Fed Funds Futures Market are? I'll give you a hint; IT"S The FED! The fed knows what's happening to the economy via the supply of reserves in the banking system. Which they (The FED) hold. It's the capital markets which businesses use to finance their daily operations. This tells you what's happening; particularly as it pertains to the credit markets and U.S. debt securities. All these markets are inter-related. The FED, the primary dealers, along with the securities brokers, and the treasury department work together. Think of how ridiculous it would be if the FED needed to wait for Economic reports to broadcast on CNBC or Bloomberg before they knew what was going on.