How much will the Fed cut on March 18th?

[dhukka]

Just saw this headline on marketwatch.com

Fed fund futures suggest cut to 1.75% a small possibility

The rise in Fed fund futures Monday morning not only suggests that a one-percentage-point cut to 2% in the Fed funds rate is fully priced in, but that there's a slight chance of the Fed cutting its base rate to 1.75%. The April Fed fund futures contract rose to 98.03.

A week ago I would have said a 50bps cut to the Fed Funds rate was the most likely outcome of Tuesday's Fed meeting. However in light of recent events such as the demise of Bear Stearns and the Federal Reserve making moves that haven't been seen since the great depression the odds of the Fed doing more than 50bps have risen substantially. In fact a 100bps cut is fully priced into the Fed futures.

So whaddaya reckon? Will the Fed warm up the helicopter or will they wake up to themselves and stop trying to fix the problem with the same medicine that created it?

 

[wayneL]

A straight out crap shoot ... 1%.

But who knows, The Fed and the Wall Street muppetologists are now merely reacting via their collective limbic system.

 

[MRC & Co]

A straight out crap shoot ... 1%.

I agree, think it will be a nice, round, symbolic number, so 1%!

Will be good for a short-term bounce hopefully!

Anybody have the latest shorting or put/call ratios information?

Extreme pessimism and we might see a very nice rally for equities.

 

[Trembling Hand]

I agree, think it will be a nice, round, symbolic number, so 1%!

Will be good for a short-term bounce hopefully!

Anybody have the latest shorting or put/call ratios information?

Extreme pessimism and we might see a very nice rally for equities.

If you are hoping for a rally that's probably the worst thing right here. A good old fashion panic is whats needed or any rally from the fed will just get dumped on. Not sure if you have noticed but the shorts control this market.

 

[chops_a_must]

Ben Bernanke, he's our hero...

 

[MRC & Co]

If you are hoping for a rally that's probably the worst thing right here. A good old fashion panic is whats needed or any rally from the fed will just get dumped on. Not sure if you have noticed but the shorts control this market.

Im not hoping for any rally as I am loaded with gold at the moment. But it is something to look out for. Have a look at historical data, IRs generally determine short-term trends.

Which shorts control the market? Members, specialists, public, floor traders? I dont subscribe to any information on this, but am interested to know.

 

[sam76]

Early days yet but I was expecting a bigger fall.

I even stayed up late to watch

 

[BradK]

Oh, I thought today was going to be the day that hedge fund managers and those bastards who shorted QBE threw themselves out of 10th story windows... what a shame... it seems to be bouncing off the open.

cheers
Brad

 

[wayneL]

Oh, I thought today was going to be the day that hedge fund managers and those bastards who shorted QBE threw themselves out of 10th story windows... what a shame... it seems to be bouncing off the open.

cheers
Brad

GS account no. 95 buying I expect.

 

[BradK]

LOL... what was that wayne? I dont understand what you are saying... and yes I do hold QBE for a bargain at $25.98 after waiting AGES to get them under $26. Thought I was so great.... but will hold from here until 2045 to wait for the recovery.

Not holding many... and makes the crash/depression all the more entertaining.

Cheers
Brad

 

[sam76]

Did I just see some green???

 

[Kauri]

they may have enough to prop to the Dow, but it seems the broader S+P is beyond them... so far...
Cheers
...........Kauri

 

[nizar]

they may have enough to prop to the Dow, but it seems the broader S+P is beyond them... so far...
Cheers
...........Kauri

Well you know what they say...
Easy to make 30 companies look good, not quite for 500....

 

[sassa]

Well you know what they say...
Easy to make 30 companies look good, not quite for 500....

And it was Lehman and Deutsche who led the buying when the S & P fell under the January low.On behalf of the ppt?

 

[Aussiejeff]

I agree, think it will be a nice, round, symbolic number, so 1%!

Will be good for a short-term bounce hopefully!

Anybody have the latest shorting or put/call ratios information?

Extreme pessimism and we might see a very nice rally for equities.

Ummm. Prolly make that "a very short-term bounce hopefully!" Like, 1 or 2 days?

 

[Julia]

Wayne (and others with a similar view), given you are opposed to what the Fed is doing, can you say exactly what you think should happen instead and describe the effect you believe that would have on global markets?

 

[wayneL]

Wayne (and others with a similar view), given you are opposed to what the Fed is doing, can you say exactly what you think should happen instead and describe the effect you believe that would have on global markets?

Well we really have to go back to 2001. They should never have created this bubble in the first place as here is where it was aways going to end.

Had they have let the 2002-2003 recession happen naturally, it would have been relatively mild, and we would in all probability be growing our way out of it nicely by now.

As it is, they have endangered the whole system, make no mistake, the western economy is in deep peril... and gifted the baton to the east and south Asia in the process.

As to what they should be doing now? They probably have to pump prime now, or we end up in a situation of cascading cross-default... and that is Armageddon time. At the same time, they should not be bailing out institutions from the cesspit of their own creation and socializing the losses to Joe & Jane Sixpack. Just not kosher.

I mean, Austrian economists have been warning of this for years. Nobody can say it was unavoidable, it was deliberately created.

Now the law of unintended consequences takes over.

Meanwhile, savers and the prudent get screwed.

 

[MRC & Co]

Ummm. Prolly make that "a very short-term bounce hopefully!" Like, 1 or 2 days?

Who knows, I cant imagine it would last too long either, not in this current state.

But never underestimate the strength of momentum. If it starts moving uniformly throughout the DJ, S&P, NASDAQ and Russell 2000 I might just hop on for the ride.

Isnt there something about the utilities leading the market also?

Just the fact I have already seen total scepticism by posting we MIGHT see a QUICK bounce following a Fed rate cut (which is historically what happens), makes me think it is even more likely. Of course, I will wait to see price movement, especially near close to validate my reasoning. Without price movement, it remains just a theory and I will not jump on board.

Good luck!

 

[wildmanchris]

Let the forest burn, it will grow back stronger than before.

Silly silly fed......

 

[sassa]

And what will be the effect on market spreads if the Fed goes 100 basis points tonight?