Will everyone be disappointed with just 25bp cut?

The Fed Should Loosen 25bp Next Wednesday:
http://seekingalpha.com/article/51544-the-fed-should-loosen-25bp-next-wednesday

 

Look how certain it was as of 10/16.


Now the equities market is almost back up to the highs, and people still haven't removed their fed funds bets.

 

You have the beginning of 50 billion dollars in sub-prime resets to start in November. Seems like a good backdrop for a decline in equities.

 

/thread

Excellent post.

 

Do you have more information on the ARM reset schedules? as in how much has already reset and how much per month is due?

 

The statement is the key. Doesn't really matter how much they cut, the real question will be, are they done?

 

If the rate cut is 25bp, will the markets tank?

I think so.

 

I am going to be bold and presume if the fed doesn't cut, the markets will initially sell, but find strength -sooner- than the alternatives.

If the fed cuts 50bp, in -real- terms (counting dollar devaluation) the market will actually do the worst I propose.

 

Fed cuts, dollar adjusts, equities bid to remain at constant value. If you worry about the value of your wealth, would you rather hold cash or equity?


Smooth sailing until 2008. No worries, mates, we made it through October.

 

Thats true bro.

November to April is seasonally a very strong period for equities.
Then sell in May, and go away