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Thread: Do Not Yell At Me For Discussing Fundamentals

  1. #1

    Do Not Yell At Me For Discussing Fundamentals

    I am a chartist in mind - those that know me however also know that I do follow the 'fundies' to some level - I mean, c'mon, dangling a narrative on top of some solid technical analysis is comforting, just like my downward slippers which have been brought out the cupboard already with all the cold Central Oregon mornings lately. That being said, my comment below are seeing recent remarks from Treasury Secretary Paulson:

    Normally there are so many comments every day from experts, police officers, you would have to be a linguist or an expert in spotting BS in order to generate sense of that, let alone make transactions from it.

    However, Treasury Secretary Paulson nevertheless might not have been more apparent in his recent remarks thus adding some clarity to what has been extravagant and volatile outlooks.

    Paulson suggested that the current market turmoil will last longer than the 1998 crisis. There have been government sources indiing that the sub prime drop out will take two years to deal with. Paulson made apparent that the current crisis has very little to do with central banks conducting too tight liquidity requirements.

    Thus, the problem of wide credit spreads and dis-functioning money markets will not be solved with the addition of central bank liquidity. Liquidity adds just ease the signs of the crisis.

    Therefore think about the equity market rally, constructed on hopes of the Fed taking bold actions by cutting interest rates by 50 bp's following Tuesday, as early. If the market doesn't receive a rate cut, expect weaker equity markets and a solid return to carry trade unwinding - i.e. lower USD/JPY and EUR/JPY.

  2. #2
    Fed inspired Love and Hate... Here, there and everywhere...

    http://www.cnbc.com/id/20869199

  3. #3
    I will not yell at you; I thought it was a nicely argued POV. Thanks for putting the time in it.

  4. #4
    Post dave!

    I am among those few who doesnt believe the fed will cut rates. The employment report made me second guess this concept, but came back to my senses.

    My argument is based on something... the fed has not given the sign yet. I made remarks the other day.

    After reading bernanke's book Inflation Targeting (twice today) I am left with the impression that bernanke doesn't like to create responsive moves, and that every rate move will be signaled long before the move is made.

    All these are exceptional times, so I wouldnt be so surprised to find a cut next week. But I am still leaning toward no cut.

  5. #5
    Quote Originally Posted by ;
    great post dave!

    I am one of those few who doesnt think the fed will cut rates. The employment report made me second guess that concept, but I came back to my senses.

    My argument relies on one thing... the fed hasn't given the signal yet. Comments were made by me in wade's story.

    After reading bernanke's book Inflation Targeting (twice today) I am left with the belief that bernanke does not like to create responsive movements, and that every rate movement will be indied long before the transfer is made.

    All these are exceptional times, so I wouldnt be surprised to see a cut that week. But I am still leaning toward no cut.
    Merlin, or anyone who'd love to remark, because many people are ready expecting a rate cut do you think no switch to rates, could be obtained by the market the identical manner as an increase normally would. Under normal conditions, it could be treated similar to an increase in fact because so many are expecting a cut?

  6. #6
    I am expecting the fed to give the signal of rates in their statement. A rate cut and the signal of a rate cut usually have exactly the same effect, therefore I think the fed will stray too far out of the market's expeions by not making the move straight away. Which is another reason I dont think we'll see a cut. . .the fed understands by signaling they could have exactly the same effect. And this would be a move that is reactive, and bernanke is on not portraying a image BIG.

  7. #7
    The implied probability of a half stage fed cut is so dominant at the moment which I would envision that holding company would actually tank the stock market; a quarter stage OTOH would show a sympathy for the poor hedgies while at precisely the same time likely just cut the market moderately, state a few hundred points. Only a guess here (personally I think they should increase rates...)
    The attached image is courtesy the cleveland fed:
    http://www.clevelandfed.org/research...unds/index.cfm

  8. #8
    Quote Originally Posted by ;
    .. .the chilly Central Oregon mornings lately...
    Nice article Dave, and see as if you did a little homework to reach that viewpoint. And how can I find fault with a Oregonian?

    . . .still warm on the Oregon coast.

    Cheers,
    Thom

  9. #9
    Saying yes, Oregon, what a fantastic state to reside in - quality of life is excellent! Glad you are enjoying it.

  10. #10
    Quote Originally Posted by ;
    The implied probability of a half stage fed cut is indeed dominant at the moment that I would imagine that holding firm would actually tank the stock market; a quarter stage OTOH would demone a sympathy for the poor hedgies while at the exact same time probably just cut on the market moderately, say a couple of hundred points. Only a guess here ( I think that they should increase rates...)
    The attached image is agreeing the cleveland fed:
    http://www.clevelandfed.org/research...unds/index.cfm
    Legitimate stage - the market would in reality get whacked if rates aren't cut and a lot of individuals (i.e. Wall Street) will eliminate money and be very pissed off! Merlin's point is valid and in-line with my thought - it isn't the Fed's task bail out and to respond, but this issue is so big that it has impacted the macro prognosis sufficient to feel justified.

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