What should the Fed do tomorrow? 25 or 50 basis point cut?

[Nimrod2005]

Not what you would like Bernanke's Fed to do, but what would help the economy most?

[bahrbearian]

1. How about no cut?

[Nimrod2005]

2. Stupid not to cut....IMO

[bahrbearian]

4. Well, then you have a Biased Poll.

Why make a cut to benefit the Banks, and lenders, then raise it in 6 months.

[Nimrod2005]

5. It will help consumers too, people like me, I will have an option to

refi in 3 or 4 months?

[AndyTiedye]

10. Cut Now, Raise After the Election to Save the Repiglickins

[yella_dawg]

3. Other

They should commit mass suicide to atone for the evil they have perpetrated.

[Virginia Dare]

17. That would be fun to see what the market did after that..

:evilgrin:

[KayLaw]

6. I say no cut

Defend the dollar.

[bahrbearian]

7. I've been told thats stupid

We've got Wall Street to think about.

[sandnsea]

8. ARMs reset to original contract

That's what we need. There was no need to be pushing these ARMs in the first place. It was a scam. Let homeowners keep their homes. That will stop the foreclosures. I think the 'market' has already shaken out those who were pushing fraudulent loans. I worry cutting interest will push inflation and just be a band-aid.

[MrCoffee]

13. can i get my cell-phone contract reset too?

why not let all contracts be reset? failure to read the fine-print is not a defense.

[Matariki]

15. You'd think banks and subprime lenders would realize that's in their best interest too... n/t

[MazeRat7]

9. Either 25 or 50 is going to spook some group in the market...

Its a lose-lose... Hope your put options are in place (or should I say in the "right" places") and your playing good defense in stocks. Its going to be a volatile week.

MZr7

[Matariki]

16. Stocks traditionally go up when interest rates are cut.

Wouldn't it be a bad move to place put options now?

[MazeRat7]

18. Not really.... some may....

As one example, the ISHARES 1-3 YR TRS BD (SHY), basically goes up when rates are high, down when low (thats somewhat over simplified) but is also measure of how the markets see inflation. If there is any talk at all tomorrow in the FOMC meeting about inflation or its perceived that the rate cut is also about hedging against inflation, this index will drop. Hence PUT's.

One other example is the exposure that some of the lenders have to the sub-prime mess, like Bear Sterns and Lehman who report earnings this week (along with Morgan Stanley and Goldman Sachs). Its very likely that one or more of these will take a hit. Again, its about perception and their exposure to the credit crisis. My guess is Bear Stearns and Lehman are most as risk. Unless they convince the street that all the problems are behind them... at least one of them is going to take a hit over the next weeks. Hence PUT's again.

This whole week is about determining where the market is headed... Personally, I think that is down at least in the near term.

But I haven't stayed at a red-roof inn lately so I could be wrong. :shrug:

MZr7

[Nimrod2005]

19. Very funny

But I haven't stayed at a red-roof inn lately so I could be wrong.

[askeptic]

11. I agree- No Cut

There is a lot more to this than just bailing out those who gave mortgage loans to people that couldn't pay them. First, this is for overnight loans between banks - it doesn't put money into mortgage markets. If you undercut the dollar too much, the people that will pay for a rapidly inflating dollar that becomes worthless at an even faster rate than it is now, is gonna be all the "little" people, as Leona Helmsley used to say. This isn't going to lower your mortgage or make it so you can refi.

A rate cut is purely psychological, and has little to do with the subprime mortgage mess - which by and large is not banks at all.

[Nimrod2005]

12. It is not going to make me refi, I need to refi anyway, I have to, but new lower rates

will give me a 6% fixed instead of 6.5%. It will encourage me to move, stimulating the economy, one more loan will get done, and give me a cheaper rate as a consumer...Nothing wrong with that.

[wildbilln864]

14. I can't vote!

One option should be "close up shop and return the money printing authority to our congress who never should have farmed it out!"



Free Ed Brown!

[Nimrod2005]

20. THANK GOD 50 and 50