Fed Funds at 50/50 on the next cut

[blazespinnaker]

I find that when the futures market is split at what the fed funds are going to do, something very very dramatic is about to happen.

The reason is, the entire market doesn't know what to price in and is balanced on a fence right now. It is about to fall one of two ways: severe dollar depreciation (and all that entails) or severe market drops.

It's a frightening, albeit somewhat exciting time.

http://www.clevelandfed.org/Research...unds/index.cfm

If they cut:

The dollar will drop, gold will spike, and the world will cry out against dollar debasing.

If they don't cut:

The market will plummet, gold will drop, and we will start to move into a nominal recession.

[Tulpen]

Re: Fed Funds at 50/50 on the next cut

Or they'll start another war, and then cut.

By the way:

If they cut:

The dollar will drop, gold will spike, and the world will cry out against dollar debasing.

I am not at all convinced that gold would spike. Gold is obviously a commodity but gold has also a lot of speculative and sentimental value, that does not stick IMHO.

[metalman]

Re: Fed Funds at 50/50 on the next cut

Or they'll start another war, and then cut.

it's war time, isn't it? in terms of the globalization/anti-globalization cycle or whatever ej calls it.

[rj1]

Re: Fed Funds at 50/50 on the next cut

Or they'll start another war, and then cut.

By the way:

I am not at all convinced that gold would spike. Gold is obviously a commodity but gold has also a lot of speculative and sentimental value, that does not stick IMHO.

I disagree. If the Fed cuts, people will know the dollar will go down, and gold has a negative correlation with the dollar where it goes up when the dollar goes down, so people will buy gold just on reaction.

[blazespinnaker]

Re: Fed Funds at 50/50 on the next cut

I am not at all convinced that gold would spike. Gold is obviously a commodity but gold has also a lot of speculative and sentimental value, that does not stick IMHO.

Well I'm not a gold bug either. I think negative yield assets like Gold aren't a fundamentally wise investment (there are much better metals), however, Gold will go up when the dollar goes down. That's pretty much a given..

[GRG55]

Re: Fed Funds at 50/50 on the next cut

Well I'm not a gold bug either. I think negative yield assets like Gold aren't a fundamentally wise investment (there are much better metals), however, Gold will go up when the dollar goes down. That's pretty much a given..

When people were lining up outside UK's Northern Rock this past summer, to take their money out of that bank despite the assurances of the BoE, the FSA and the Chancellor, do you think they gave a damn what the dollar was doing? Did all those funds end up across the street in a Barclay's account (supported by the same assurances from the same bureacrats)?

Now we have people worried about the security of their Etrade account balance, or whether their money market fund will "break the buck". What's next?

Could it be that a very small, but growing, number of people watching all this might think it wise to hold a bit of insurance? And therefore don't much concern themselves with the US$ short term on the (inevitable) next rate cut, or the state of the Indian wedding season jewelry trade?