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March 18, 2008 – Comments (7)

Big day today.  It will be very interesting to see what the Fed decides to do with interest rates.  Let's get a little informal poll going.  What do you believe the Fed will do today.  Before this whole Bear mess it seemed like there was a lot of talk about a 50 basis point cut.  Now I hear a lot of talk about a full point.  I personally am splitting the difference and submitting a guess of 75 basis points.  So what do you think?

Deej

7 Comments – Post Your Own

#1) On March 18, 2008 at 6:19 AM, podrag (< 20) wrote:

One hundred basis points... at least... and that will just be for starters... Forget the Yen carry trade, welcome to the US Dollar carry trade... And gentleman, you'd better come with a Caterpillar truck, cuz there's gonna be plenty of them for you to carry.

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#2) On March 18, 2008 at 7:15 AM, EScroogeJr (< 20) wrote:

1 percent at least, maybe even 1.25%. On Friday I expected 1% only, but then on Saturday I saw the first predictions of 1% on yahoo finance, and by monday evening my view had already become the mainstream. So I now see an equal chance of 1% and 1.25%, and even 1.5% will not surprise me.

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#3) On March 18, 2008 at 9:26 AM, TMFDeej (99.45) wrote:

Thanks for the comments.  These certainly are interesting times.  If I am not mistaken, I don't believe that the Fed has ever cut by a full point at a single meeting.  That's why I'm still leaning towards 75 basis points with an extremely dovish statement.  Unfortunately, at this point it looks like the market would be extremely disappointed by such a move, which not that long ago would have been considered huge especially given the low level that rates are at right now. 

I can see how one would think that the Fed will move by a full point.  They might feel forced into doing that large a move because that much is already baked into the Fed Funds Futures and they might concerned about upsetting the markets.  As much as one wants to separate this from politics, this is still in an election year and the Fed must be feeling tremendous pressure from the current administration to fix the economy ASAP.  People are already losing a tremendous amount of wealth as the values of their homes fall, if the stock market craters too people will feel even poorer.  A falling stock market will make our sagging consumer confidence even worse than it already is, exacerbating the slowdown in consumer spending.  This will be an interesting afternoon.

Deej

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#4) On March 18, 2008 at 11:37 AM, Tastylunch (29.48) wrote:

.5  point,

fed probably counts the 25 point cut towards this cut already.

Mr market will likely be upset.

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#5) On March 18, 2008 at 12:51 PM, GS751 (27.49) wrote:

Ill go with 75 bp.

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#6) On March 18, 2008 at 1:18 PM, Tastylunch (29.48) wrote:

nice call deej, gs751

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#7) On March 18, 2008 at 2:25 PM, TMFDeej (99.45) wrote:

Thanks Tastylunch.  I win the grand prize, a free round trip ticket to Recessionville :).

Deej

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