Fed rate cut?

[Captain G]

When do people think the US Fed will cut rates and by how much to stop the fall ?? If not are we doomed ??

 

[Nyden]

Re: Fed rate cut ??

When do people think the US Fed will cut rates and by how much to stop the fall ?? If not are we doomed ??

By the time it gets to that, the market will be hoping for a full 1 point cut, will only get .75 - and massively decline

Could happen, but in all probability; market is hoping for .75, will only get .5, and same situation...

 

[Captain G]

So would it be fair to say that our current market value has already got some form/ expectation of US rate cut loaded into it ?? And if it's not large enough we'll go down big time ??

 

[Nyden]

So would it be fair to say that our current market value has already got some form/ expectation of US rate cut loaded into it ?? And if it's not large enough we'll go down big time ??

Of course it does. It did last time as well, we had a massive sell down after the previous cut!

Will it happen this time as well? Difficult to say, perhaps the gov will be more aggressive this time, but - let's face it, if they're too aggressive, it reeks of desperation, which will also scare investors away!!

 

[trinity]

Will it happen this time as well? Difficult to say, perhaps the gov will be more aggressive this time, but - let's face it, if they're too aggressive, it reeks of desperation, which will also scare investors away!!

kinda sounds like, "damned if you do, damned if you don't". Will a Fed rate cut "cut it"? What will save the markets this time around?

 

[Nyden]

kinda sounds like, "damned if you do, damned if you don't". Will a Fed rate cut "cut it"? What will save the markets this time around?

That's exactly right. That is where the fed find themselves I'm afraid.
They either inflate the economy, or let it sink. Neither choice is desirable.

Heck, even if they inflate it; they still run the risk of letting it sink

 

[Bushman]

That's exactly right. That is where the fed find themselves I'm afraid.
They either inflate the economy, or let it sink. Neither choice is desirable.

Heck, even if they inflate it; they still run the risk of letting it sink

They will sacrifice the dollar to save the economy.

 

[Nyden]

They will sacrifice the dollar to save the economy.

But that isn't a guarantee of a 'saved economy'
They could make things worse, what was that about recessions being healthy / needed?

 

[chops_a_must]

They will sacrifice the dollar to save the economy.

How can you save a CONSUMER econcomy by deflating the currency? The whole economy relies on the buying power! It's already partly the cause of the problem.

 

[Nyden]

How can you save a CONSUMER econcomy by deflating the currency? The whole economy relies on the buying power!

Yep. They'll lose their international buying power. Made In China, anyone?

 

[2020hindsight]

well you were pretty close there Nyden
0.75%
saved the day yes?
thanks crise
(and they openly predict more rate cuts in a month or so - think I heard it right)

Now - ? what will Aus Reserve Bank do? (inflation higher than expected etc etc)

 

[Nick Radge]

Here is some recent history of Fed rate cuts and there impact on the S&P 500...






This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

 

[doctorj]

Very interesting Nick. Have you analysed the indicies following rate cuts over a greater timespan?

Macroeconomically, the chart makes sense - the fed is cutting rates as it gets evidence of a slowing economy. The statistics it uses to make that assessment come out more frequently than company profits and with the impact of inventories, many companies can sustain production in the face of falling sales resulting in a time lag.

What would be more interesting is a longer term analysis looking at the typical length/depth of the contraction following the start of rate cuts.

 

[Nick Radge]

doctorj,
Specifically no I haven't as such but I am aware of the 'cumulative' impact of rate cuts which is what we saw back in 2002 - 2003.

The best indicator I have found for economic contraction is the unemployment rate and that says to me that the US is firmly in recession now.

 

[2020hindsight]

nick
that red arrow is a worry
can't you talk to your contacts and change it somehow ?

 

[Nick Radge]

OK. My main man in Washington, Ben someone? said this would fit..

[/URL]

 

[2020hindsight]

lol
don't you love the precision of these graphical predictions

THe bit I liked on the news...
"If the Aus economy settles, then we will get a ratehike, which will make it unsettled
But if it doesn't settle, then they won't raise the interest rates, which will probably settle things...
and if you aren't confused, then you just don't understand what's going on"

PS Maybe you should shorten that arrow a bit, lol - otherwise there's a hike of some sort coming up - probably me heading bush to find a log hut

 

[doctorj]

The best indicator I have found for economic contraction is the unemployment rate and that says to me that the US is firmly in recession now.

No disagreement here - when pundits start tossing around the phrase 'technical recession' you know there's every chance they actually believe the US is in a recession but have been told by their editor to dress it up nicer.

My completely gut feel opinion on this is that by taking hard rate cuts early the sky will either fall or the recession will be shallow and short lived, perhaps with a whole lot more delayed pain a few years down the track.

 

[RichKid]

Here is some recent history of Fed rate cuts and there impact on the S&P 500...


This post may contain advice that has been prepared by Reef Capital Coaching ABN 24 092 309 978 (“RCC”) and is general advice and does not take account of your objectives, financial situation or needs. Before acting on this general advice you should therefore consider the appropriateness of the advice having regard to your situation. We recommend you obtain financial, legal and taxation advice before making any financial investment decision.

That's great work Nick, thanks. Charts and stats really help to clarify certain assumptions. There's a chart by Elliott Wave International somewhere that I saw last year which has the Dow annotated with fed rate cut dates....will try to find it, might even be a video somewhere. Bear with me guys til I locate it.

 

[doctorj]

Bear with me guys til I locate it.

I love it ! Best laugh I've had all day