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EScroogeJr (< 20)

only 1%

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March 16, 2008 – Comments (5)

No, 0.25% and  0.5% will not do the trick because Bernanke knows that the market already expects something more than 0.5% and less than 0.75%. Now, 0.75% would be a surprise, but it won't really shock anyone, and Bernanke understands that a failed attempt to shock the market means one more wasted arrow in his quiver. 1.25% would be radical indeed, but it could raise the concern that he is spending his arrows too fast or create a panic on the oil futures market. To cut 1.25% and announce that this cut will be the last one would help avoid the dollar panic, but it would run contrary to Bernanke's intentions, because he knows he is going to go all the way to zero. So a 1% cut looks the most likely.

5 Comments – Post Your Own

#1) On March 16, 2008 at 1:31 AM, AnomaLee (28.64) wrote:

You think the discount will eventually be at 1%?

I don't know. That would put some serious pressure on the dollar, so I hope they don't go that far for the sake of our economy. Hell, I think this is already the fastest decline in rates ever, but I'm keeping my eye on the bond market.

I do feel that if we don't get 75 basis points on March 18, 2007 the market is going to be pissed, big money will flee to the bond market, and we'll be below 11,200 in less than 5 trading sessions. Thankfully, I'm confident the Fed will cut 75bps or maybe a whole percent. They are really out in force to restore confidence to brokers, traders, and the rest of Wall Street.

Remember, the FOMC is doing this because they care... These guys are so generous.

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#2) On March 16, 2008 at 2:48 AM, EScroogeJr (< 20) wrote:

AnomaLee, I think the discount will eventually settle at minus 1%, though I don't see it happening during this economic cycle.

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#3) On March 16, 2008 at 2:50 AM, EScroogeJr (< 20) wrote:

And yes, 11200 is impossible because 11500 will trigger an emergency meeting and a new emergency rate cut.

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#4) On March 16, 2008 at 1:35 PM, leohaas (32.73) wrote:

11,508.74 (the low on Jan 22) is the magic number. The Fed will whatever it can to prevent the market from dropping below that number...

0.75% will do. 

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#5) On March 17, 2008 at 9:09 AM, AnomaLee (28.64) wrote:

Flooding the market with more credit is not going to get the job done, and it's only going to make things worse and scare me away from the American economy.

We're taking a hybrid action between how the Bank of England and the Bank of Japan and doing the worst of both.Remember what I said. The FOMC is running out of options to stop the bleeding in the market and there's only so much they can do to bail their friends on Wall Street from losing their Porsche's.

If they disappoint with their actions or scare the market tomorrow. The market will test new lows somewhere close to 11,200

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