I suppose if JPM was a crap stock at 2% Fed Funds, it'll remain a crap stock at 2.25% Fed funds... tomorrow .. all smoke .. no action.
This commodity sold-off helps Fed fight inflation. Why does the Fed need to raise rate then? That's excellent for Fed to buy some time for the market. No hike. If we all favor let market play / fool itself, tomorrow will be no change in rate. Market bounces back across the board. Since the rate remains low, dollar falls, material bounces back. Whether you want a short trade from a dead cat bounce or get rid of the material stocks, you should have your chance tomorrow. If the correction is inevitable, it should bounce back before it goes dead. I still believe in the global growth story, maybe not to a very extreme like all time highs in June/July etc.
Playbook has been written - talk like inflation hawks and keep rates low. Inflation will be thrown under the bus in order to preserve some growth and rightly so, as reactionary as the fed has been they really had no choice but to respond in this manner or risk depression. In the grand scheme of things 2% ff rate in this environment isn't even historically that low even when you take into account the real rate. Why would 1% be out of the question? Inflation is a lagging indicator and one that given the state of the economy should come down. The stat with the highest correlation to rising inflation isn't gold, oil, or money supply growth - it is unit labor costs. Anyone look at this lately? Worker has no power to demand higher wages, they are lucky if they haven't been downgraded to part time. IMO I see a higher probability of a ease than a hike.
a very close friend of mine said a large hedge fund was under water and needed to liquidate positions in order to satisfy a margin call. this hit some of the trade desks and bamm !!!! selling intensified. he says the selling will continue tomorrow.
That is why I said it is a conspiracy theory, Handjob. If you for even one second think there is no corruption on Wall Street, you should enroll in kindergarten, it starts in a few weeks.
Yep. They're selling what they can, not what they want. We saw this a few months ago, remember? All the hedgies had the same positions on and had to sell their best picks because that's where the liquidity was. As to the OP, why would Fed hike when they can have the same effect with words? No hike, look for a much tougher statement on inflation.
HOLY SHIT you guys need to turn off the machine and go get laid!! This thread is not a call, it is a CONSPIRACY THEORY. Hell if Landis would stop patting himself on the back, he may discover he has two arms!!
And if someone in early 07 told you that there was major problems with the RE market you would have said the same thing right?
Heres my conspiracy theory. FED has barred traders from shorting sensitive financials in the US so they turn north and start shorting everything commodity related on the TSX which is about 99% of the stocks. Hence TSX -300 and counting. And we all know how helpful our regulators are up here at defending naked shorting./sarcasm
Irrelevant.. I think Daal's point was that the forecasters have been dead wrong and continue to miss that point that the Fed ALWAYS overextends..