Do Not Yell At Me For Discussing Fundamentals

good point NFX... i just reread the statement a few more times and it does seem they have shifted toward the growth side of the mandate (btw, i do realize its a dual mandate, i just mentioned inflation because worked better with the point i was making: ).

anyway, here is the statement...


of course they announced the discount rate cut at the same time (or did discount rate come after?). initially i thought the discount rate was the response to "prepared to act as needed". but after further review, i do see how this can be the signal of lower fed funds.

thanks for making me think!

In Brazil, we can this "a bath in icy water"... LOL

Why You Shouldn't Worry About a Fed Rate Cut
http://www.cnbc.com/id/20759739

That's the first sensible thing I've read on CNBC in quite a while

This is a huge test for Bernanke - the pressure on him is stronger than ever... His Inflation Targeting is really a great insight - thanks for the recommendation Merlin - I actually used a bunch of his quotes in my presentation this weekend:


l“Because of the interaction of long policy lags and short political horizons, activist policies may lead to worse results than would a policy of restraint.”


l“There is no long-run tradeoff between inflation and unemployment. Because inflation inhibits economic growth and efficiency, an increase in inflation may in fact lead to slightly higher unemployment in the process.”


l“A reason for setting price stability as the primary goal of monetary policy is a growing belief that low inflation helps to promote economic efficiency and growth in the long run.”

No wonder he's so careful over inflation - lower interest rates sending USD lower would hardly help matters.

Yes. I'm not educated on this in any academic matter, but from what I've read unchecked inflation is far worse than a "normal" cycle recession.

I really do wonder what would happen if not even 25bps are cut ;p

Excitement all done now. Mark calendar Oct 30-31 for next Fed meeting. In the end CBOT rate watch came close calling for 100% chance of -25pcs cut and 50% chance of a further -25pbs cut.

Half a point surprised me. Today's reaction didn't.

Question now is how strong/fragile was this move from Fed. Bernanke went all-in in my opinion. Even with this cut, if some more funds/banks resume dropping shoes, Fed will be in a deeper "poop" than it was until now...

I really hope this financial crisis to dim so we could enjoy less dramatic trading days here....

Further develpments and economic data in the coming weeks will be key for the long run, imo.

yeah half point suprised the hell out of me too, especially when they took the discount rate with it. i expected bernanke to be much more steady with the policy, either things are worse than i thought or bernanke is softer than i thought.

oddly, i thought the statement was rather hawkish, given the situation.

Skepticism does seem to come with being a trader - not sure if that is good or bad. Naturally, I was not being 'mean' to Liesman - I just like to hear from traders versus journalists.

1/2 point of fed funds AND discount - surprised to say the least. You slice it anyway you like - good for market or what the heck do they see that made them do this?

trade the charts in the interim

Oh yeah. Says who? :

Aye Aye, sir!

AFAICS, the CB's from the majors have the unenviable task of popping a bubble slowly. Or rather lots of bubbles (Dow, housing, derivatives, gov't & personal debt, boomer lifestyles...). Not an enviable task. I think this story still has lots of time to run...OTOH, it is nice to see the return of volatility.

Fed inspired Love and Hate... Here, there and everywhere...

For the second time in a month, Bernanke and Co. have burned the shorts -- badly...

Then, uhm, don't be short?

The charts showed setups ahead of the FOMC that were tradeable(posted one over in the James16 thread e.g.).
Or more simply: don't trade the FOMC, trade the following week.

Is it our fault hedge fund managers can't trade worth crap and can only follow trends by staring at 200 period MAs?

I'd like to reference FXJarhead's signature: PPPPP.

Um, this thread is about funnymentals - not chart setups. Doesn't mean you can't talk charts. But you seem to have an axe to grind against us cable theaders. Take it out on the market.

Well, this is getting awfully common across this forum. You open a thread to discuss "X", first come the guys saying "Y rules" LOL.....

I opened a thread on Monday to "discuss possible trades/pairs for the rate statement outcome"
- All I got was "I´m not trading this madness" kind of post

Another day I opened a thread about a scientific subject, which was mentioned in Al Gore's book.
- First post was "stop reading Gore's garbage"

I rarely see a thread survives the 1st page within the opening subject here.

Dyslexia, likely. :

I wrote hedge fund managers and referred to the cnbc article...where's the cable thread come in?

Although I wouldn't advocate the live newstrading with 20 pip spread fun etc that happened over there DURING the FOMC, if that's what you mean?

That I'll always "grind an axe" against, since it's a surefire way of losing cash, no prob.

As for fundamentals and charts - Dave, the AUTHOR of THIS thread said

Quote

Disliked

trade the charts in the interim

.


So please, no nonsense.

As for what fundamental players could have done ahead of FOMC to be positioned right I do not know, but I also don't know what would have caused them to be short in the first place, either way.

Edited the last post to not even quote cesarnc and only the article, maybe that helps the paranoia.

Whatever

Good question; so just a little ramble here. Feel free to shoot any or all of it down....

I think they are aiming primarily at lowering ST risk of more credit-related collapses. Saw today in the WSJ a brief note in the "Heard on the Street" column that indicates how widespread exposure to CDO's are (the lead was about Smucker's, a popular NA jam & jelly manufacturer). It seems all sorts of companies are holding these off the books rather than parking short-term cash in the MM; the extent of the holdings really isn't known. But if companies that hold these can't offload them quickly to meet cash demands, you can wind up in big trouble very quickly. All these companies (right up to Microsoft) say they only are holding very high grade paper, but given what has happened over the last two months, those grades are rather dubious, to say the least...

And the problem is international; I looked at the 2006 annual report for Northern Rock, and an interesting anomaly poked up - in 2005 their exposure to derivatives was around 600 million; in 2006, around 3.5 times that. 2007 - who knows? I would assume that these are what is causing the problem, to a large extent.

As for ccy pairs; I guess my safest bet is still USD/CAD, simply because the US is an energy glutton, Cad has lots of it (both oil and electricity); to a large extent Canada has resolved the issue of Medicare (big potential for disaster there in the US with the elections heating up), a budget surplus, a higher dependence on commodity exports, etc., etc. Downside risk of course is that the US is Cad's biggest trading partner, any trouble down in the states will eventually find it's way north..

GBP/USD - I think that one is in trouble; the BoE has opened a huge can of worms by guarenteeing the safety of all retail banking funds; it has both local and international implications - from complaints from farmers who aren't fully protected financially from an outbreak of hoof & mouth (even though it may have been due to a gov't lab's error), to the EU, which is looking into the legality of the BoE's action. To say nothing of the fact that in a bad case scenario it equates to the UK running the printing presses at full speed....

Eur/USD? Don't know, there was noise this morning from Germany - the economic engine of the EU - about possible problems with a strong Euro. But that's a pretty mixed message; last week they seemed to be ok with it. Their export market to the US is weaker than say Canada (since Cad is driven by basics - food, fuel, even shelter via lumber & copper), while maybe Europe's only has one major basic (sex - via wine, vehicles, natty clothes ). Sorry.. Anyway, politics in the Eu is going to be as big an issue as it is currently in the States, and the risks there (French tension re. the euro strength, immigration, Russia's resurgence, even Belgian Flemish/Walloon problems) all contribute to the pot...Of course on the positive side are boring but important things like machinery orders for China

USD/JPY - well, on a capital account basis, that pair should be well under 100. But given the lurking demons in its banking sector, its aging population, the rise of Chinese competition w/r to the manufacture of mid-to-high quality goods, they really seem to have little choice but to keep the ccy weak. It's too manipulated to say anything sensible about....