Fed Theory - what do YOU think will happen?

[c1ue]

Put up your predictions for the world to see!

Here's my thinking and how I'm directing my trading:

1) Fed will cut, but in 25 bp increments. This could be totally wrong if Bernanke wants to be seen as 'not Greenspan', but I believe he is the same animal: tool of financial establishment.

2) Fed and FOMC will talk tough continuously to try and increase impact of 25 bp cuts

3) 9/18 cut will be accompanied by neutral language with slight softening bias - i.e. cut was due to liquidity crisis, not economic recession or housing. Economy at risk but not in trouble. Not sufficient evidence for housing spillover into general economy, etc etc.

4) Stock market will fall on news. 25 bp expected but strong hope for more. Weak language will introduce short term doubt for the thundering herd.

5) Gold will fall on news - less than stock market. Gold miners will fall more.

6) Dollar will fall on news - Euro flirts with 1.4. Still pondering yen direction.

7) 2 more 25 bp cuts until end of 2007; one each during October and December meetings. If there is a 50 bp cut, it won't be until December - too early to gauge this possibility.

[zoog]

Re: Fed Theory - what do YOU think will happen?

Put up your predictions for the world to see!

So we get to be shadows for the ShadowFed?:cool:

I had been expecting a rate cut after the scheduled meeting (or even before), possibly even as much as 1%, considering all the gloom and despair coming out of Wall Street, and apparent expectations for a large cut to save Cramer's hedge fund friends.:rolleyes:

But Bernanke's statements in Berlin were vague, and the dollar index was below 80 yesterday. Unless there's a rally in the dollar between now and then, I think the Fed will be hesitant to cut too much. I wouldn't be entirely surprised if they make no change at all! But at most, I agree with c1ue that a 0.25% cut seems likely for now.

I would say the small or no cut will send stocks down, probably ~ 300 points for the Dow after the announcement. Further cuts and various other random news will drive some up days, but I think a general downward trend in the stock market will continue into October at least. I can't remember when the big financials reluctantly announce how much money they've failed to make recently... is it September or October?... but I'm sure that will be a down week.

[c1ue]

Re: Fed Theory - what do YOU think will happen?

Zoog,

Shadow Fed is a concensus - I'm looking (and posting) individual views.

Also you'll note I'm posting more than just rate and bias info.

[Jim Nickerson]

Re: Fed Theory - what do YOU think will happen?

You guys should transfer your comments over to the FOMC thread started by Finster.

[Guest]

Re: Fed Theory - what do YOU think will happen?

OK, move right along folks. Nothing to see here, it's just a minor fender-bender. Move along please folks. No rubber-necking please. Please take the next exit bound for the Finster "deconstructing the FOMC" terminus.

[zoog]

Re: Fed Theory - what do YOU think will happen?

I guess no one else is willing to risk their carefully-cultured iTulip reputation to speculate here on the Fed, etc.:rolleyes:

bok bok bok bagawk

[Rajiv]

Re: Fed Theory - what do YOU think will happen?

I think a 1/2 point -- the dollar is tanking anyway! Might as well as make hay while the sun shines! Who knows what the morrow might bring! Let us drink up (on cheap credit!) and enjoy life while we can -- a hangover is a hangover -- and we will deal with it later! Classic alcoholic behaviour is what I expect!

[Guest]

Re: Fed Theory - what do YOU think will happen?

<< bok bok bok bagawk >>?

Was ist das?

Dieses klingt nicht zu mir deutsch. Was ist die Bedeutung von "bok bok bok bagawk"? Warum spricht dieser ZOOG Kerl in den Rätseln?

[Guest]

Re: Fed Theory - what do YOU think will happen?

Zoog -

OK, I figured it out. But it's not "Bok Bok Bok Bagawk".

It's "Kot Kot Kot Kodehck"!

A matter of regional pronunciation is not a minor detail.

[rabot10]

Re: Fed Theory - what do YOU think will happen?

No cut, not yet it's to early in the game

[Guest]

Re: Fed Theory - what do YOU think will happen?

I agree with Rick Bishop. It's going to be an astounding, market confounding 'no cut' and all us longs in gold and silver are gonna take a bath.

Bernanke then gets to strut around proclaiming his stern central banker credentials.

Rick does this mean we have to split the pot if we win the call, or do you get to win the pot alone 'cause you placed the bet first? Or are you gonna give me the pot because I'm starving over here?

[Tet]

Re: Fed Theory - what do YOU think will happen?

No cut, not yet it's to early in the game

I would think business already stopped spending and home buyers already stopped buying. Too late in the game not to give the cut, I don't think it's in anyone's best interest for Fed Surprises. ECB cuts, Canada cuts, NZ cuts, Australia cuts, Japan doesn't raise, South Africa cuts, Brazil continues to cut, Russia cuts, China cuts and the race to zero begins.

[Gordo]

Re: Fed Theory - what do YOU think will happen?

I would think business already stopped spending and home buyers already stopped buying. Too late in the game not to give the cut, I don't think it's in anyone's best interest for Fed Surprises. ECB cuts, Canada cuts, NZ cuts, Australia cuts, Japan doesn't raise, South Africa cuts, Brazil continues to cut, Russia cuts, China cuts and the race to zero begins.

UK did not cut. Stayed at 5.75%. They want all the money.

[Tet]

Re: Fed Theory - what do YOU think will happen?

UK did not cut. Stayed at 5.75%. They want all the money.

BOE is no longer in charge of the Empire, the Federal Reserve is, BOE follows the Fed not the other way around. Once Bernie cuts the BOE cuts.

[Gordo]

Re: Fed Theory - what do YOU think will happen?

BOE is no longer in charge of the Empire, the Federal Reserve is, BOE follows the Fed not the other way around. Once Bernie cuts the BOE cuts

BOE may still be running things. We'll find out after 9/18.

By the way, the word is pronounced Empah and some believe that the US is being eased back into it. Remember, Sir Colin Powell received his Knighthood from the Queen.