Bull and Bear

It does feel that way at times . . .


Sandy Huffaker via Cagle

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Discussions found on the web:
  1. Stuart commented on Sep 14

    We might as well just get that Fed meeting over with now….ZZZZZzzzzzz

  2. KP commented on Sep 14

    Not the first time I’ve seen you troll’n for traffic Bernardo. Please don’t make it a habit.

  3. Mkt Swimmer commented on Sep 14

    I think the bull will take over the run. See my blog.


  4. Rob Dawg commented on Sep 14

    The bull has more money, they are his dice and as Larry constantly reminds us he is sitting on the right side.

  5. Eclectic commented on Sep 14


    Who you got picked out to fill in for you Tuesday?

  6. Dean commented on Sep 14

    Inflaion is back! I think gold is a useful benchmark because its magic power is relatively constant over long periods of time. Hence an ounce of gold should buy twenty barrels of oil, on average. Today, at $700 per gold ounce, $80 a barrel of oil this implies an under estimating value of gold, hence inflation is coming back. However, most people will not stand for gold going for over $1000, so fed rates will not go down.

  7. whipsaw commented on Sep 14

    I have come to the conclusion that there won’t be a rate change, just a change in bias. Why? Because that would be the best way for Uncle Ben to get a nice drop until 8:30 on Friday when he will announce another discount rate drop which will gut the bears completely at the open, just like last month.

    You can engage in all of the dope-smoking-libertarian fantasies that seem to predominate here about how things should work in a non-existent capitalist world that you like, but serious money is in play that needs some help and the best way to help them out is to let them front run fed policy. So GS and the other big boys will set up to buy the swoon and sell the spike. I am staying out of this and will wait to see how things look after Oct 15 or so.

    Just understand that this is a game of Chemin de Fer and since you have an opportunity to bet on the side of the house, you should do so if you are going to play.

  8. Crush Da Bears commented on Sep 14

    Ben will cut rates on Tuesday.

    He is not stupid not to cut on Tuesday, and then to be forced to cut a few days later, looking like an idiot again. Ben will not make the same mistake twice.

  9. corky+mr clean=jeff macke commented on Sep 14

    “I have come to the conclusion that there won’t be a rate change, just a change in bias.”

    have you bothered looking at options on fed funds futures? less than 1% chance of ffunds staying @5.25%, 50/50 split between 25 or 50 bps cut. them options dont lie-

  10. whipsaw commented on Sep 14

    Why should they cut the formal rate target when the effective rate was cut a month ago? They can claim to be fighting inflation, etc., yet continue to do whatever they please.

    Ben and Paulson will continue to manipulate behind the scenes, not out front. The mysterious underlying bid in SPX futures will continue to exist just as it has since the day Paulson was sworn in and it will all be good from week to week regardless of what is going on in the Real Economy/World.

  11. whipsaw commented on Sep 14

    corky+mr clean=jeff macke said:
    have you bothered looking at options on fed funds futures? less than 1% chance of ffunds staying @5.25%, 50/50 split between 25 or 50 bps cut. them options dont lie-

    If you were Jeff Macke, you would not have asked the question of me. But since you did, yes, I am well aware of what the bets are and I simply smell another instance like early May 06 in which “everybody” already knew how things would go. I made a lot of money that time around, but unfortunately did not walk away from the table later.

    One problem with looking to what the futures boys do is that they are trading on a much larger scale than what I (or perhaps you) do and pop in and out all day. Another problem is that the index futures market appears to be Paulson’s preferred vehicle for manipulating the cash markets and I don’t have the capital to play that game.

    As far as the fed fund futures market goes, that’s purely g*mbling and you need to acknowledge it. The options side of everything is just more effective leverage. It doesn’t serve any economic purpose that I know of, just like the VIX market. I have no reason to believe that anyone in those markets will make any money other than the MM’s- take the bet to Las Vegas and at least deal with a guy in a tux who is paying known odds.

  12. Estragon commented on Sep 14


    Too funny, yet sadly ironic.

  13. wunsacon commented on Sep 15

    Eclectic, I couldn’t agree with you more about you and many others on this blog…as well as our host!

  14. David commented on Sep 15

    A fed rate cut will just lead to staglflation.

    “I must upfill this osier cage of ours With baleful weeds and precious-juicèd flowers.”

  15. Eclectic commented on Sep 15

    Mr. Kotok,

    What you are describing would seem to represent, as an analogy, a sort of de-facto D.I.P. financing mechanism operated by the Fed through its discount window and other operations, or by special regulatory means already at its disposal:


    …Therefore, in the sense that you use in your commentary (quoting from it below):


    “The Fed is trying to construct a system in which the markets will function while the losses will not be subsidized. It has attempted to implement rule changes in order to facilitate that outcome.” End quote.

    …it appears to me that, if you are right, the Fed is already proceeding in a manner similar to the way bankruptcy law is administered, because your statement represents exactly what the responsibility of the bankruptcy court is – To preserve function where possible, to stop losses, and to prevent the subsidization of: 1)- prior losses, by using work-outs, supervised litigation, trustees, etc. to mitigate between creditors and debtors, and 2)- future losses, by securing the rights of the providers of interim D.I.P. financing, and installing a future business plan that will not damage subsequent creditors.

    I am surprised however when you say… “If for some odd and unexpected reason they don’t cut on September 18th, it will also say something about the Bernanke Fed’s decision on how to use (or not use) the Fed Funds rate.”End quote…

    …that you didn’t also recognize in your excellent analysis at least the possibility that what Bernanke said at Jackson Hole (and is supported in his previous speeches), he actually means as well – (parphz) that “Fed monetary policy is not as effective today for issues regarding the housing construction and financing industries as it was prior to approximately the mid-1980s, prior to the exponential growth of the mortgage securitization industry.”

  16. Greg0658 commented on Sep 15

    Conan when asked Whats best in life?

    ‘Crush your enemies
    See them driven before you
    Inundation of the women’

  17. Ron commented on Sep 15

    How we got here…where we are.


  18. Winston Munn commented on Sep 15


    You place too much emphasis on Bernanke’s mind and not enough on his b-u-t.

    Paraphrasing, “Fed policies may not be able to save housing, B-U-T if consumer spending slows and the real economy is threated, warm up the helicopters.”

  19. techy commented on Sep 15

    crush da bears…

    and exactly what change will happen after sept 18 within a week, which will make the fed cut rate??

    if you think markets will correct as much as 4%, so what? what is the connection between health of economy and market?

    but i think FED may ease upto 25bps….just as a cautious move such that he is not seen behind the curve….afterall we have bad retail sales number and bad employment number to back his cut of 25bps.

    i dont think 50 bps is going to happen….that will be like throwing all the oil at the fading fire all at once…..since practically they cannot go below 4% (too much pressure on dollar)

  20. techy commented on Sep 15

    i think gold, oil forex markets are already priced in for 25bps rate cut.

    anything more than that….it will get ugly because of oil…saving in interest rate of consumers will be eaten up by GAS price.

  21. Crush Da Bears commented on Sep 15


    One 50 bp works better than 2 x 25 bp; there have been multiple papers written about it, there is no controversy.

    Personally, I think they will cut by 50 bp in September and temporarily pause in October to assess the response.

    Lowering interest rates will stimulate economic growth in the US and strengthen the dollar longer term, hence lower price of gold, commodities and oil (traded in US dollars), and lower the rate of inflation.

    Most of the inflation is exported, it is mostly secondary to strong overseas (developed countries) demand for commodities and dumb Bush ethanol policies; therefore, keeping high interest rates in the US and restricting growth in the US to fight inflation is a dumb policy.

  22. Crush Da Bears commented on Sep 15

    Should read: …therefore, keeping high interest rates in the US and restricting growth in the US to fight global inflation is a dumb policy.

  23. pj commented on Sep 15

    I think the 25 bps cut is almost a foregone thing. No more though. However, I guess it won’t lead to any sustained rally or further on, any Armageddon as the bears are prone to forecast.
    Most likely the market is likely to do more of the same as these days. Move up, move down and everywhere in between.
    Just like on the Fed cut and its effects, we seem to be ascribing more seriousness to the consequences than they are likely to be.

  24. wunsacon commented on Sep 15


    >> ‘Crush your enemies
    >> See them driven before you
    >> Inundation of the women’

    Not “Inundation” of the women. :-) Quote should read:

    “To crush your enemies, to see them driven before you, and to hear the lamentations of their women.”

  25. Estragon commented on Sep 15

    Crush Da Bears – “One 50 bp works better than 2 x 25 bp”

    You need to define “works”. The conduct of monetary policy affects many things, and over varying periods of time. In order to say something worked, you have to define the specific effects desired by a specific move at a specific time and compare the extent to which those effects were actually achieved.

    In the current context, it isn’t entirely clear what the objective is. Until very recently, the fed has been pretty clear that it wanted and expected growth to slow somewhat, as high resource utilization had the potential to cause unwanted inflation. In order to make guesses about what the fed will do, we have to first figure out what it wants to see happen, and what risks it sees as essential to avoid.

    The available evidence suggests that the fed obviously wants to avoid a complete lockup of credit markets, but it’s far less obvious that they want to avoid any further slowdown or that they’re willing to risk higher inflation. Hopefully they’ll give some clarity on that next week, and their choice of action (or lack of it) will reinforce that clarity of purpose.

  26. techy commented on Sep 15

    on another note….i am not sure homeowners are going to get a complete relief…since the problem is not high interest rate…but mispriced houses….and no one wants to reprice it since it will make them look bad….but no one wants to buy a overpriced stuff either.

    but in the long run…debt is definitely cured by cheap money….so there will be some relief to housing also.

  27. Winston Munn commented on Sep 15

    The catalyst for real estate growth is first-time buyers. Lowering rates will not appreciably help this group as home prices remain exaggerated while there continues to be a falling availability of exotic loan types that allowed first-time buyers to artificially and temporarily support those mispriced values.

    Mortgage rates and home prices will fall of their own accord over time if there is no artificial inducement to spend.

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