Logique
Investor
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- 18 April 2007
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I was surprised at the strength of the overnight rise on the SPX, up 25 to 1978 (+1.28%), especially with the FOMC yet to announce on interest rates.
One possibility I'm thinking about is a final surge up (About 6-10%) for the U.S Market on the back of a favourable Fed decision, before commencing the major leg of a bear.
Comparison is from the ASX in February upon the RBA's last favourable decision.
XU1 and IFB1 moved 6% in a straight line
#justchinathings
So who's up for a late night / early morning?
I hope you've all got your popcorn / coffee / redbull / vodka / marshmallows / sleeping bag etc ready.
Even if you are not trading... it'd be a historical event just to witness.
My prediction: 12.5bps raise followed by very dovish commentary. Market sells off initially on the back of rate rise for may be 8-12 minutes, then rally hard into the close.
If rates are not raised... expect the opposite.
So who's up for a late night / early morning?
I hope you've all got your popcorn / coffee / redbull / vodka / marshmallows / sleeping bag etc ready.
Even if you are not trading... it'd be a historical event just to witness.
My prediction: 12.5bps raise followed by very dovish commentary. Market sells off initially on the back of rate rise for may be 8-12 minutes, then rally hard into the close.
If rates are not raised... expect the opposite.
There's no way i'm staying up, or getting up for that crap. Easier to just stay flat until this non-sense is over. I'm flat intra-day and have been since Monday afternoon, flat my swing trade account and will be until next week.
Next up, the fiscal cliff IIIVIXIIIIVIII
I'll be genuinely surprised if they don't raise by a smidgin.
Is 12.5 bps the least increment available ?
Zero is ideal, with no inflation nothing is wrong with that!
Rate hike is not happening man.
I remember I was in Hong Kong about 6 months ago for work, was watching Bloomberg with a colleague and all the talking heads were giving off very convincing noises about rate hikes and so on.
At the time the market implied probability of rate hike in September was like 70-80%.
I was trying to explain to him how they can't hike rates, because it would entail a reduction in their balance sheet (or significant real GDP growth) and I just couldn't see balance sheet reduction (or GDP growth) happening.
Fast forward to today, market implied probability of rate hike in Sept is <20%, basically the market is now pricing for March 2016 rate hike. Most everyone betting on the curve to steepen also got creamed as it continued to flatten.
Ask yourself, do you think the Fed balance sheet will contract or expand by March 2016? GDP to contract or expand? Because however you answer that is also the answer to the probability of rate hike.
As for QE, well, so long as the US Federal budget has a deficit larger than the trade deficit, I think we can expect more QEs and POMOs from the Fed. The less Treasury flow the rest of the world buys, the more flow the US corporate sector and Federal Reserve itself must buy.
market still looks like it's pricing a March 16 hike (using CME FedWatch). However the market has been consistently wrong on this for a year now. No real growth, no hike (since the balance sheet ain't shrinking).
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