Bernanke Blinks

I have a thought to short the Dow Friday afternoon. I think we’re going to push to 14,000 by then and retest the previous highs. Then more bad credit news surfaces someplace to take us lower. Anyone have thoughts on this?

Gold up 9.80 at CBOT to 725, Silver up .25 close to 13 and the dollar tanking to just over 79. Boy did they ever make a huge mistake. Who in their right mind wants to take a double beating with inflation and devaluation of the dollar when looking at market returns?

Kiss the market goodbye. I’m with Jim Rogers who has made real money as opposed to Ben who is an academic assclown.

Fed has become Wall Street’s bitch. Hahahah!

Get me another beer, bitch!

Maybe now I will be able to sell my house in Las Vegas, and NOOO!!!, I am not a NINJA or some skanky speculator who yanked all the equity out of my house and then let it go to foreclosure. I am just one of those folks with great credit, a solid job future and a relocation for my job. I am not WALL STREET and Bernanke is definitely not my bitch…BTW, I am extremely fiscally conservative…

SoNotintheKnow,

The psychology in the housing market has turned negative. Lower your asking price and you will clear out your inventory.

In response to the actions by Helicopter Ben, the fed funds futures is pricing in a 90% chance the Fed cuts rates again in Oct to 4.5% up from a 26% chance priced in yesterday that we’d see a 4.5% fed funds at that meeting. The market is also pricing in a 60% chance that the fed goes another 25 bps in Dec to 4.25% up from a zero chance priced in yesterday.

“The psychology in the housing market has turned negative. Lower your asking price and you will clear out your inventory.”……

Duhhh….Does not help if there ARE NO BUYERS!!!! because there is no money to borrow…(Not my words but Barry R’s words on Kudlow yesterday)

SoNotintheKnow,

Living in LV, you’ll know about games of chance.

If your potential buyers can’t finance, you could take back a high rate vendor 1st lien and use that as collateral on your new home. You’ll even pick up some vig, if your credit is good.

So,

“There is no money to borrow”

Remember,

Why would one want to accept risk and loan the banks money at a low interest rate!!!!!

And NOW….

Interest rates went lower today….ok

As a bank customer/depositor, why would I accept even less return on my money from the bank??….

Yep all the old folks living off the interest on bonds who just took a pay cut, while paying hefty annual increases in their assisted living rents and healthcare costs, really appreciate that all the brokers on Wall Street can now afford a new Benz or Range Rover or Bentley… because that’s the way it should be no?

Thanks for your thoughts, MarkTX.

Looks like I picked the wrong day to stay 50% cash.

I would seriously consider shorting after this runup. The fed pulls out this unanimous move, how are we not to suspect that there are problems out there? 4% from record highs and the fed pulls out this move. When did this happen in past history when oil and other commodities were at such high levels and US dollar at such low levels?

Shit is about to hit the Bernanke fan!

‘Paging “Calamity” Poole, paging “Calamity” Poole, confidence resoration required in aisle 6..”

So can we call this a calamity now?

Is your confidence in the economy restored now?

maria’s nose used to be a roundish roman type.
now it is strait. what happened?

Wow. Given the vote, it looks like everyone is really spooked. And given the BoE news across the pond, it seems like they are also frightened.

I’m not surprised my call on them holding steady was incorrect. I am surprised at the magnitude of the dual cuts in rates.

Where to do we go from here? Well, if re-flation is the path that is going to be tried, and we are unwinding a real estate bubble, it sounds like Stagflation is likely with a much lower dollar in the long term.

It may also be that once the dollar goes to hell, in maybe 3-7 years the manufacturing sector will start up again in a big way.

Am I going to have to get out some bell bottoms and review some charts from the seventies to get a leg up on trading?

Ben, Ben, he’s our man, if he can’t do it… Well… The free market could have… But I’m glad I saw this coming from a mile away (and invested heavily in gold), due in no small part to Barry ~ Thanks!

Interest Rate LimboReactions To The Rate Cut

You can’t fight the tape. Lehman comes out ahead of expectations and has a killer conference call. Bernanke & Co stomp down interest rates. Equities markets shoot for the moon. Wall Street’s economists have had mixed and contradictory reactions to…

How does an avg investor get into Euros?

Posted by: costa | Sep 18, 2007 4:55:35 PM

An ETF would be the easiest, but volume is thin. I do think that volume will now improve with the FED action of today. Everbank is another possibility if my memory serves me right.

“Yield on the 10 year is now well below 4.50%.”

Actually right now yield on the 10 year is 4.48%, which is ABOVE yesterday’s close.

BTW, I’m starting to think that cutting rates was a good idea. American economy is addicted to consuming increasing quantities of foreign money (that’s what housing bubble was – lots and lots of foreign money flowing directly into the private sector). Cut rates, devalue the dollar, foreign money goes away, America goes through withdrawal and then recovers healthier than before.

costa,

Everbank does have some interesting products you might be interested in. There are a bunch of other ways, but this is just one.

I’m not buying Euros myself. I think they will also have currency problems of their own. This is a global problem. I view the challenge here not so much to make money on such a move. I will consider myself fortunate if I am able to shield savings in boring investments.

I guess Benji Boy Bernanke, lapdog to the investment banks, will be gifted with some revisionist economic history rehabilitating former Fed Chairman Arthur Burn’s reputation. Arthur and Benji Boy are now two of a kind. So, regrettably, the good work of former Fed Chairman Paul Volcker comes undone. Too bad for us.

Lauteus, I know you were just being silly, but, actually, you may want to load up on pork:

http://www.siouxcityjournal.com/articles/2007/09/18/news/latest_news/00d0fbf7a4f9a3c38625735a005d6dab.txt

The Sioux City John Morrell plant is recalling about 250 laid off employees as it increases production to fulfill a new trade deal in China.

The move reverses cuts earlier this year that temporarily idled about 485 workers, or about a third of the workforce at the local plant. At the time, Morrell’s parent, Smithfield Foods, said it was shutting down the plant’s second shift because of unfavorable market conditions.

In August, Smithfield announced a deal to sell 60 million pounds of pork to a major Chinese trading firm. “Although our agreement today is modest, we believe there could be additional purchases and we are hopeful that this is the beginning of a longer term and growing association,” Smithfield CEO Larry Pope said in a statement at the time.

…of course, SFD fell 6% today…

lauteus,

Now you are talking like a good old fashioned capitalist. We can’t have any of THAT! LOL!

Well, how about borrowing the cheapest money you can find to buy a chicken farm. Pay back the loan with soon to be inflated dollars. Then export micro-wave ready chicken dinners to the rest of the world and profit.

Wait. That isn’t going to work in our market economy. Instead, buy a dairy or cotton farm or some other commodity with price controls, price floors, or incentives not to grow. Then reap the rewards of the subsidies. This way we will be putting money directly into your pocket, as a tax payers, and you need not lose a wink of sleep whether or not you are buying into a viable business!

You could also start a hedge fund and get bailed out. Or a car company. Or an airline. Or…

Okay, enough sarcasm for now. I need a drink. What a day.

looks like its a good plan to invest atleast 30-40% in equities (i am not a gold bug)

but on other hand…how low can FED go if things get worse…..i dont think he has room below 4.0.

and i wonder again how is europe/india/etc.. going to fight inflation with cheap money flowing all over from USA?

i do feel sad that i am not a risk taken and prefer to stay in cash.

it still does not make sense to me that cutting rate means lower risk in equities……i wonder how all the mark-to-model are going to manage their virtual assets…and how this low rate will help them??

Wow! The Canadian Dollar is now worth 1.01 US.
Good luck down there.

Chris,

Canada didn’t do so well last time USD/CAD was at parity. Whatever the US is doing, it will suck Canada along for the ride.

Anyone else remember when it wasn’t just a question of the price of gas, but if you could buy gas?

This movie is starting to look familiar.

resistance became the floor today. On NYA, on SPX, on DJIA, on NDX, … 29:1 upside on the NYSE. Too many expecting a “sell the fact” scenario. Too many expecting 25bps cut. Not only can you not fight the Fed, but you can’t fight the greed to follow. The fourth turn is approaching and then the final straight (if it’s a race). Too many managers needing to hit some serious numbers to save the year. The scenario is now set for a furious 4q. Never get in the way of a manger’s bonus/income stream… Will it be straight up. Doubt it. l bet it will be violent in both directions with the primary trend up. But not before frustrating all of us with $$ to put to work…

So will this rate cut be analogous to the first rate cut in Jan 2001? Stocks went falling after a 3% upside move on 1/3/01.

I guess we’ll see by Friday.

America is hooked on quick cheap fixes for just about everything i.e. drugs, entertainment, and now dollars…..this country is going to hell in a handbasket.

We have built an entire economy based on contiuous asset inflation and credit growth. It really is inflate or die.

For all of you looking for a higher market, you might want to look at VOLUME today. Not saying you are wrong, but, did anyone notice that VOLUME was not compelling, to say the least? Compare today’s volume to the “shakeup” of last month. The big $ appears to be waiting for something more significant than Bernanke showing the strings attached to his various body parts to wade back in.

Be careful out there, sports fans…

Estragon-I remember, dimly, I was just a kid.
This is gonna be really hard on our rural economy here. The two biggest employers are Michelin Tire and the Bowater pulp mill. Oh, and the lobster fishery. And my neighbour who grows Christmas trees for New Yorkers. Could be a hard winter for some.
Ben Dover Bernanke-I like it!

I think tomorrow everyone starts to get scared. What does the Fed SEE!!!!! Oh my.
No one mentioned Oil today but it’s on a moonshot. Thank goodness energy is ex-inflation and winter is on the way. Maybe I can heat my house with copies of Greenspan’s tome…that would be irony, no?

Welcome to Brazil-America.

Barry…”The Fed now has a third problem to deal with: They have become Wall Street’s bitch”…

… my husband is trying to wipe up some really nice wine from my computer screen.. and now that the laugh is over, this is pretty sad.

Seems that only 18 days ago BB eloquently said, “It is not the responsibility of the Federal Reserve — nor would it be appropriate — to protect lenders and investors from the consequences of their financial decisions.”

As my husband told one of our sons many years ago, “All you have is your word”.

Barry…”The Fed now has a third problem to deal with: They have become Wall Street’s bitch”…

The Fed was not bailing out the hedge funds today. The Fed was punishing the hedge funds today for using 1:25 leverage to short US equities? (More than 50% of the hedge funds were short before the meeting)

Sorry SPECTRE of Deflation. I didn’t mean to steal your Everbank recommendation. Your reply came in when I was typing.

Posted by: rebound | Sep 18, 2007 5:09:42 PM

We are all family here trying to figure out what the Hell to make of this mess. Any ideas are welcome! :>)!

Oil is speculative, going bubble.

Maybe some other commodities as well.

If those contracts sell someone pays a lot of money for gas.

The word from UK this AM scared me.

Their deposit insurance raised all their underwriting limits for North Rock’s “run”.

The fed bought $25B in repros yesterday.

There is about $47b in FDIC deposit insurance reserves, but it is in intragovernment debt accounts, so the cash was spent in Iraq.

The fiscal mess is worse than the money mess.

Soemthing scares me, the FOMC sees more than I see.

So, the vast devaluation of the US debt begins, bail the fiscal mess out.

It’s as clear as day. A 50 bps cut with oil this high, gold this high, the dollar this low, means they are much more concerned about something behind the financial curtains tham they are letting on about.

corky,
unless you ‘cashed out’ today you haven’t booked a dime. So I guess you are happy about being ‘right’. Opinions are nice but should never interfere with trading. Trade what you see, and dont get to ‘cocky’, Corky…

http://tinyurl.com/2vgh4o

Crush,

I keep some in the freezer… But I made up a batch of Eclectic’s Special Rasberry Jubilee Sauce for the crow, so don’t feel too badly for me.

It would probably be good on your Sweet Bear Sausages too… You could probably put together a good tail-gate party.

“When business in the United States underwent a mild contraction in 1927, the Federal Reserve created more paper reserves in the hope of forestalling any possible bank reserve shortage. More disastrous, however, was the Federal Reserve’s attempt to assist Great Britain who had been losing gold to us because the Bank of England refused to allow interest rates to rise when market forces dictated (it was politically unpalatable). The reasoning of the authorities involved was as follows: if the Federal Reserve pumped excessive paper reserves into American banks, interest rates in the United States would fall to a level comparable with those in Great Britain; this would act to stop Britain’s gold loss and avoid the political embarrassment of having to raise interest rates. The “Fed” succeeded; it stopped the gold loss, but it nearly destroyed the economies of the world, in the process. The excess credit which the Fed pumped into the economy spilled over into the stock market, triggering a fantastic speculative boom. Belatedly, Federal Reserve officials attempted to sop up the excess reserves and finally succeeded in braking the boom. But it was too late: by 1929 the speculative imbalances had become so overwhelming that the attempt precipitated a sharp retrenching and a consequent demoralizing of business confidence. As a result, the American economy collapsed. Great Britain fared even worse, and rather than absorb the full consequences of her previous folly, she abandoned the gold standard completely in 1931, tearing asunder what remained of the fabric of confidence and inducing a world-wide series of bank failures. The world economies plunged into the Great Depression of the 1930’s.”

Alan Greenspan in a 1966 article describing the role of fiat money in the assertion of “statist” objectives.

First time poster, long-time lurker and fan o’ Barry.

Remember in mid-August when Fed Officer Poole said that only “a calamity” could cause the Fed to cut rates? I think seeing the BBC reports outside of Northern Rock had more to do with this reckless cut than anything else. It was a pure panic move. What I want to know, and what hasn’t been asked is what ugly event is being hidden from us?

Another point not being made is the impact this will have on the lower and middle classes in this country. When capital flight occurs, interest rates will spike, our debt will not be covered and inflation will go to the moon as the dollar collapses. There is no way the average middle class guy can keep up with this when prices at Wal-Mart go up 30% and prices at the pump and grocery store reach 1970s levels (at best). Inflation AND an environment where banks still won’t lend. The Wall Street crooks got bailed out and the middle class, savers, retirees and the poor get screwed again.

This will blow up in BB’s face. And he deserves it, though the average citizen does not.

Having just gotten their latest fix, the rate-cut junkies are calling for more on October 31st.

This is reminiscent of the tax rate cut advocates. It fixes everything.
.

All those commentators who claimed the dollar would rise on a Fed cut – and there have been a lot of them – were obviously… wrong.

10 year 4.56 and CLIMBING.

Banks gonna be squeezed…gotta lower the prime, etc, but with inflation (watch that gold and oil baby) about to soar (lets see, we have a trade deficit of $60 billion a month and all of that is gonna cost a lot more in Dollars), people are gonna want higher interest rates on their money as we all come to appreciate how little it is worth. This is about to get interesting and curious. Will capital inflow to the US shrivel up and die in the next few months????? Wonder if we can get a yield curve inversion where the 5 year cd rate is above the prime???? Would that be superstagflation?????

Wall Street’s Bitch? In the immortal words of Marion Barry, I think “the bitch set us up”.

I think those worrying about getting lower interest rates on their money have a short wait until that problem is solved and they get a whole brand new problem, real old fashioned, 1970s style inflation.

We shall see. Will the Fed cut again before inflation stats start showing?

I dunno…..but its more fun to watch now than the Philadelphia Eagles….

Lewis

My new single…It’s awful but true….

“Spread em’ beyatcch!”

What about inflation pressures?

There have been lots of cries around the investment world since yesterdays Fed rate cut about the inflationary pressures that are likely to be buoyed by the 50 basis point cut. A large amount of economists and strategists alike believe…

The dollar will continute to drop until the trade deficit goes back to at least under 2% of GDP. It is runing at a rate of 6% of GDP now. In reality no country should run a trade deficit of more than 1% of GDP for an extended period of time.
Ideally the US should move to get the trade deficit well under 1% of GDP.
I suspect this will happen over the next 2 decades…

In the U.S. interest rate are going lower, Gold is going higher, Oil is going higher, inflation is going higher, the dollar is going lower. What is wrong with this? Everything! At some point the FED is going to have to raise rates bigtime. We are in a very, very, precarious situation at the moment. I think Gold will tripple to over $2,000 an ounce when the market finally wakes up and sees the real inflation. Last I checked a lower dollar = higher import prices. There is no inflation deflator here. With commodities on fire you can forget about that. Bernanke should have never lowered rates last week. However, the Fed might be doing something that few have talked about. Maybe the Fed has abandoned the dollar to crush the trade deficit. Good luck, it will take 20 years to correct our 6% of GDP trade deficit and move it back to under 1% of GDP, unless you want to seriously disrupt the global economy. We are in for tough times people. Very tough! The FED will not be able to save housing with lower rates. We are in for a 10 year decline in home prices. It is called a cycle!