There's a post on this site that said $250 million was borrowed last week at the discount window. Tony Crescenzi at Miller Tabak said yesterday that the average weekly withdrawal is $187 million, which comes to 0.5% of GDP. Almost all interest rates are keyed off the fed funds rate, not the discount rate. The discount window has usually been used as a last resort for ailing banks. Since the discount rate was cut and not the funds rate, the effect is psychological. Liquidity should improve, but that's because it was frozen in the inter-bank and money markets. It may presage a cut in the fed funds target though. I only think that will happen, however, if the economy is really slowing.
Every financial pundit you see on the tube is saying the fed will cut in Sep. They will not cut if the data comes in strong, oil is high, hurricanes are brewing. What if we get a major hurricane in the gulf. Looks like we very well could. Funny thing is, these pundits say the fed will cut, yet they say the economy is fine. Use your head, lead don't follow. Nothing in the data suggests a rate cut. Earnings came in just fine. The dow went up 2000 points from May till July, now its off 1000 and the cry babies are screaming for a rate cut. You will know how manipulated the markets are if all the sudden the economic data starts coming in much weaker. I just can't get over how such a small correction in a market that has been steadily rising for the past 5 years is getting this much attention. Its like patient investors never get opportunities anymore, beacuse of walllstreet cry babies the investment banks and brokers.
This is all window dressing and political BS. It creates the illusion of doing something while doing nothing. It gives the CNBC money honey cheerleaders reasons to say "go, market, go," with the "the lights are on but nobody's home" look in their eyes. The headlines read "markets soars on rate cuts," somewhat of an overstatement, don't you think? Idiots. What will the impact be? Nobody knows and anybody that says they know is either a shill or a complete moron. Or maybe some kind of clairvoyant genius, but I doubt it. If the market takes off again or the market continues to drop it will be for completely emotional and irrational reasons, as is usually the case. We're at a tipping point right now. It could go either way. It really doesn't matter as long as you're on the right side of the market after it picks a direction. Or take a shot now. You have a 50% chance of being right. I guess I'm going to risk missing the big move. I'm all in cash now. I don't like the charts for going long. Maybe I'll change my mind next week.
What do you expect from journalists and long-only fund managers? Then once they get the cut the mantra will be "don't fight the fed", and this is where it gets funny, at least if you look at the last few cycles which are shown on the attached chart. I have to apologize for the crudeness of this chart because I couldn't locate the proper symbol in eSignal, and after considerable searching I gave up and patched this one together. But as you can see, if you went short when the Fed started easing & went long when they started tightening you would have done extremely well for yourself over the past 10 years. Will this time be different, or will it end up a "be careful what you wish for because you just might get it?"
I agree. (Except for the conspiracy part.) The cacophony is deafening. Yet if the data isn't weak, I don't think they'll cut. Bernanke is a big believer in allowing markets to find their own levels without government intervention. Greenspan often let the tail wag the dog. I don't think that will happen with Helicopter Ben.
I think you should care what the Fed is going to do, maybe the morning of the day they are going to do whatever they do.
GS note on Friday morn smacks of a calculated attempt to add umph to the squeeze on the discount ease so they could deal a chunk of exposure...after their monday report on the GA/GEO/NEO losses, probably got swamped with redemption requests into the wed deadline imagine we will be on hold while most others get back to a tightening bias.
Have you lost your mind? "Cry babies"? When banks tighten their lending standards to the consumer that's one thing, but when they virtually halt thier lending to one another it's a crisis. There are no bids for the bad debt that all too many banks, brokerages, insurance agencies and even E-Trade (of all places) are holding, and no bid for the bad paper held by institutions overseas. Do you seriously think this won't show up in their deteriorating balance sheets next quarter, or in the PMI for instance? How about the consumer? Now that lending standards have been tightened beyond all rational measure, no one can afford to buy a house and this furthers exacerbates the glut of houses on the market----> far greater supply than demand---->dimnishing value of homeowners' net worth----> reduced spending---->further corporate weakness, etc., etc., etc. ..... The Fed funds discount window rate cut was an emergency measure to restore some semblence of normalcy in bank-to-bank business, but that's it. Yeah, the economy is just fine, no problems, go home people, nothing to see here..... You're not related to Larry Kudlow by any chance, are you?