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10-15-2007, 05:39 PM
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Quote:
Originally Posted by David Rodriguez
That's all well and good, but I think we're all better at predicting volatility surrounding certain events than we are predicting Black Swans.
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I'll remember that snarky little comment Rodriguez.
On a more relevant note, the daily Dow chart looks pretty bearish. Check out MACD...(chart courtesy of stockcharts.com) |
10-15-2007, 06:40 PM
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Bring on the carnage!
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10-16-2007, 08:59 AM
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Quote:
Originally Posted by Ivanovich
Bring on the carnage!
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I'm still a fan of the possibility of a gray swan.
We know that the G7 and FOMC meetings are on their way, but we can't exactly predict what they're going to bring.
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10-17-2007, 03:08 PM
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Wow, it seems as though expectations have really shifted in the past day of trade.
Markets now price in an approximate 54 percent chance of a move in October, near-100 percent through December.
Yet stocks are tumbling and the dollar is rallying.
On to waiting for the next black or gray swan...
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10-17-2007, 03:18 PM
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On a relevant note for this thread, Antonio and I have released our most recent "Watch what the Fed watches report".
I think the net takeaway from this week's data is that we're not out of the woods yet. Though market conditions have improved, they're still pretty tight from a historical perspective. Also, recent Retail Sales data may overstate the strength of the domestic consumer.
http://www.dailyfx.com/story/special...644031158.html |
10-17-2007, 04:46 PM
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Quote:
Originally Posted by David Rodriguez
On a relevant note for this thread, Antonio and I have released our most recent "Watch what the Fed watches report".
I think the net takeaway from this week's data is that we're not out of the woods yet. Though market conditions have improved, they're still pretty tight from a historical perspective. Also, recent Retail Sales data may overstate the strength of the domestic consumer.
http://www.dailyfx.com/story/special...644031158.html |
Anyone think the Dow looks pretty shaky? While it only closed down 0.15% today, earnings news has been pretty bad, and I don't think traders are going to see their wishes for a rate cut on October 31st fulled. I think there's a lot of downside potential here... |
10-18-2007, 03:47 PM
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Taking a look at commercial credit/bond markets, things have definitely worsened in the past week of trade. Credit Default Swaps have gained considerably, while the Treasury-Junk bond spread has widened.
It seems as though market troubles continue. Is this yet another reason to expect Fed rate cuts through year-end?
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10-18-2007, 04:19 PM
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Quote:
Originally Posted by David Rodriguez
Taking a look at commercial credit/bond markets, things have definitely worsened in the past week of trade. Credit Default Swaps have gained considerably, while the Treasury-Junk bond spread has widened.
It seems as though market troubles continue. Is this yet another reason to expect Fed rate cuts through year-end?
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I'm not sure why they cut, since I don't think it actually solves anything. Banks aren't going to go back into the risk on this stuff no matter what the Fed does, simply because they don't want to be left holding the bag. And as for lowing the rates meaning better mortgage rates for homeowners and buyers - don't think so. The 10 year hasn't exactly been playing ball for the Fed. Mortgages are actually more expensive in many cases.
So what does lowering the rate do? Spurs inflation, sends oil, gold and other asset classes into orbit. Trades one bubble for another. |
10-18-2007, 05:54 PM
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Quote:
Originally Posted by Ivanovich
I'm not sure why they cut, since I don't think it actually solves anything. Banks aren't going to go back into the risk on this stuff no matter what the Fed does, simply because they don't want to be left holding the bag. And as for lowing the rates meaning better mortgage rates for homeowners and buyers - don't think so. The 10 year hasn't exactly been playing ball for the Fed. Mortgages are actually more expensive in many cases.
So what does lowering the rate do? Spurs inflation, sends oil, gold and other asset classes into orbit. Trades one bubble for another.
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I think all the Fed cuts have really done is buy them a little time, but you're right, it doesn't solve anything and will only make the end result worse. Think they'll follow it up with another cut on October 31? |
10-18-2007, 07:52 PM
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The big Treasury stop-out rate reduction today coincides with newly released, weaker-than-expected economic data. Looks like the "trading desk" has made a pre-emptive policy rate change. A FFR cut is much more likely. The foreign exchange traders seem to think so. It would be characteristic of Bernanke to move simultaneously with, & decisively with, significant changes in the data.
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10-21-2007, 04:21 PM
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Yes, I've been thinking the DOW is in for some down time for a little while now also, Terri. I'm not certain whether the Fed cutting the rates will be the catalyst for the doom and gloom predictions, or whether it'll be China increasing rates because they fear of their bubble bursting. I've only been in forex for 15 months, so I'm pretty new at this stuff, but I'd be willing to wager the Fed leaves rates the same, and China increases theirs.
Any thoughts?
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10-22-2007, 09:32 AM
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Quote:
Originally Posted by vnmonica
Yes, I've been thinking the DOW is in for some down time for a little while now also, Terri. I'm not certain whether the Fed cutting the rates will be the catalyst for the doom and gloom predictions, or whether it'll be China increasing rates because they fear of their bubble bursting. I've only been in forex for 15 months, so I'm pretty new at this stuff, but I'd be willing to wager the Fed leaves rates the same, and China increases theirs.
Any thoughts?
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I agree that there is a major possibility that the Fed leaves rates steady in October while China continues to tighten. The trajectory of the respective economies (US and China) couldn't be more different. However, it is certainly worth noting that Fed fund futures are pricing in a rate cut and if US equities continue to unravel ahead of the FOMC meeting, they may follow through on market expectations.
Also, I don't think the Fed is the catalyst for the "gloom and doom," I believe the "gloom and doom" is the catalyst for the Fed.
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10-22-2007, 09:43 AM
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Also, I don't think the Fed is the catalyst for the "gloom and doom," I believe the "gloom and doom" is the catalyst for the Fed.[/quote]
So you beleive that a recession is coming regardless of what the Fed does and there really won't be any real "catalyst" to get the wheels reversing quickly?
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10-22-2007, 10:40 AM
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Quote:
Originally Posted by vnmonica
So you beleive that a recession is coming regardless of what the Fed does and there really won't be any real "catalyst" to get the wheels reversing quickly?
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Basically, yes. I think the seeds have already been planted and we've already seen a housing-led slowdown, which I think will turn into a consumer-led recession. We've watched the housing sector gradually collapse, which has led to tighter lending standards for the heavily-indebted consumer. Once we start to see employment conditions deteriorate, consumption growth will finally start to falter.
What do you think, vnmonica? Can the Fed put the brakes on our path towards recession? |
10-22-2007, 01:16 PM
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If not a full blown recession, then perhaps a very good slowdown until springtime. I'm reading a lot of negative growth and worries from around the globe about all economies, and I think investors overreact with fear and make things worse than what they really are. Everything has been looking rosy for a few yrs, and it cannot continue forever without some sort of correction or slowdown so that a renewed upswing can continue.
What I always wonder is how bad can things really get? I don't think the Fed would allow things to get "really" bad, but I don't know what that level is. I'm 41 and I don't recall how badly of an impact the past recessions had on the average individual. My parents and I ALWAYS complained of the high cost of everything all the time. If people loose their jobs, they downsize their home and go on umemployment.....If a recession hit me in the face, I'm not sure I'd even reconize it!!
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