Commodity complex is getting tagged today across the board. It is my conspiracy that Goldman has been tipped off on tomorrows suprise rate increase ot the FOMC meeting, and are liquidating volume today. My take is that the street will ultimately view an increase with a bullish equity market response, and a large short covering rally in the dollar. Adjust your portfolio accordingly.
I concurr. Even if we don't see a rate increase I think the language would be incredibly hawkish with a large minority of members voting for an increase.
I would say about 99.9% of people do not anticipate any kind of rate increase tomorrow, would be amazing to see them raise them which they should do, maybe that is why commodities are selling off. Going to be interesting tomorrow.
If the fed does ANYTHING at all till the end of the year it will be a ease not a hike. the hawks forecasters were wrong all the way from 5.25 to 2% and they will continue to be wrong
Nah, if Bernanke eases the Fed loses all credibility. Asia will sell bonds at huge losses just to salvage what they can. I could easily see a situation where Bernanke hikes but leaves the discount window unchanged. After 9/11 the discount window was lower than the Fed Funds rate, which means it was risk-free arbitrage for any bank that needed it. Would it be better to have 6000 bank failures or provide artificial profit until the write-offs are finished.
I could but I wont. its not that relevant, we could argue that all day but what matters is what they WILL do, not what they SHOULD do
Rate cuts thusfar have hurt the broad economy via creating crippling inflation at the wrong time of an economic cycle. The rate cuts have not equated to lower mortgage or consumer rates, and in fact have created higher rates as the middle to far end of the curve rates are based on inflation. So higher inflation created by lower rates has created higher rates for consumers. The only ones to have halfway benefited from lower rates are the banks we have and continue to socialize losses in. Go McCain, 4 more years!!!
Quote from PAPA ROACH: Can you explain how the rate cuts have helped the economy thus far? Fed is up to its eyeballs in shit and swatting flies with its eyelashes. Credit contraction (see: banks) vs inflation. The right thing to do objectively is raise rates, but the system is gamed naturally from day one...so in light of the game, rates should stay or be lowered and its majority participants suffer the consequences.
Due to your highly simplistic "conspiracy" view of things, you have no idea how many BANKS were helped-out by the liquidity that the FED offered to these financial institutions. Given your logic, we should just allow all of the banks to go under; and that would be fine because they don't do anything as far as CAPITAL FORMATION is concerned regarding economic growth, investment, jobs, etc. Try taking an Econ. 101A course some day.