do you think it’s possible that the Fed will not cut rates this week, or we can be sure to expect at least a 25bps cut? i think it would be wise to shave no more than 25bps, what are your thoughts.
Fed Fund Futures are predicting something like a 96% chance of a 25bps cut. Hard to bet against that…
My guess is 25, but some are speculating we could see another 50. I find that hard to believe considering almost half of the votes last meeting were in favor of a 25 bps cut only. I’d be way less suprised if they did nothing as opposed to dropping another 50 on us.
well if the futures were predicting a 60% chance of no cut, then it wouldn’t be a surprise.
The markets suggest 25bps, but watching the dollar lately has become very painful. I did see today that China is allowing the Yuan to appriciate at a faster rate (albeit too little too late). My guess is that we get 25 now and another does of Dr. Ben’s in December. The consumer looks to be slowing a bit and the last thing the Fed wants is a recession going into an election year.
“The consumer looks to be slowing a bit and the last thing the Fed wants is a recession going into an election year.” Although I concede that the Fed is certainly under political pressure, this is exactly why I’m glad for an independent Fed (that sometimes is blamed for killing elections ie Bush Sr).
Don’t know why people are “so into” this cut, only for the street’s reaction sake? I guess short term it matters, but there is no way any rate cut will stop a credit recession, so does it really matter? 25-50-450 bps. Who cares, we are inflating the dollar to the stars this currency, both short term and long term, is in major, major trouble
^now time for you to make the contrarian bet. Edit: e.g. Short gold, I dare ya 
I think they will probably cut 25 bps, but I would disagree with the fed futures probability of 96%. If they cut by another 50 the USD will tank
BosyBillups Wrote: ------------------------------------------------------- > ^now time for you to make the contrarian bet. > > Edit: e.g. Short gold, I dare ya LOL. You first. Oil maybe, Gold…no way!
Well, I’m not willing to short gold right now, but I’ll take the short side of any sufficiently long term position that says that gold will underperform something like the risk-free rate on a global basket of currency. Gold is a nearly useless commodity (except for the relatively small amount that goes into jewelry which is not driving the price now or probably ever in the last 300 years). Like Keynes said, one of the most useless activities of mankind is to travel to distant areas of the world, go far underground to dig up gold, transport it halfway around the world only to put it back underground again. For most of my adult life gold has been a very poor investment and then it spikes up for awhile, people get excited, and then it goes back to the jokes about being a semi-precious metal, etc…
BosyBillups Wrote: ------------------------------------------------------- > Don’t know why people are “so into” this cut, only > for the street’s reaction sake? I guess short > term it matters, but there is no way any rate cut > will stop a credit recession, so does it really > matter? 25-50-450 bps. Who cares, we are > inflating the dollar to the stars this currency, > both short term and long term, is in major, major > trouble I promise you my PA is very into this cut…
DTD, Seriously, you don’t think that Presidents, especially those seeking re-election, don’t call the Fed Chair and put a little bit of pressure on them? If memory serve me correctly, there are a number of studies that show during the 4th year of a Presidential term, the market usually rallies, mostly as a result of the Fed lowering rates.
We’re not in the 4th year of a presidential term, and rallies that year are usually attributed to hope and belief in the new president. Or, you know, randomness.
Gold is hardly a useless commodity; according to Gold Council in Q2/07, your “relatively small” amount that goes into jewellery amounted to 671 tonnes or 73% of total demand (about 100% of quarterly global mine output). Gold as an investment was 14% of demand. http://www.gold.org/value/stats/statistics/gold_demand/index.html The source is a consortium of gold companies, so there may be some slight bias but I find it hard to believe that they can (or will) adjust a near non-existent number to 73%. I agree on the point that digging stuff out of the ground for jewellery is a waste of energy (same with diamonds). It’s too bad humans do lots of stupid things to make themselves seem important.
“The markets suggest 25bps, but watching the dollar lately has become very painful.” Exports are holding up this economy, I have no problem with a lower dollar–at least for a little while, and I don’t think the Fed really cares either. My vote is for 50bp.
dissention is a good sign that the cuts may soon stop
another 25 basis points… When was the last time the Fed dropped rates 75 basis points in two months while the economy was growing strong?
Thomas Hoenig is my new idol. Good for him for standing up against Helicopter Ben. He’s the only one of that group not drinking the kool-aid being fed to them by hedge fund managers with underwater positions.
Eddie Deezen Wrote: ------------------------------------------------------- > Thomas Hoenig is my new idol. Good for him for > standing up against Helicopter Ben. He’s the only > one of that group not drinking the kool-aid being > fed to them by hedge fund managers with underwater > positions. yup, couldn’t agree more