Predict the Fed - April 30 rate decision.

[swag]

I think they're going to cut one more quarter point (25 bps) and they'll indicate in their statement that they're going to sit tight at 2% for a while because they're kinda skeered of all the inflation going on.

[Javaman]

1. I'm thinking they are going to pass. no cut at all. nt

[swag]

2. Could very well be, but part of me (my groin?) thinks that they will

understand and play to that behavioral foible of market participants that makes said investors take weird confidence in whole numbers, tens, hundreds, and thousands.

2.00 is what you want: two is what you get. We're staying put.

[roamer65]

3. They'll hold at 2.25...BUT...

continue to drive M3 money supply thru the roof.

[swag]

4. Two for a hold, one for a quarter-point drop and pause.

What say ye?

[Zynx]

7. A hold to provide some level of support to the dollar.

[Yavin4]

5. A Quarter Point Cut To Protect Wall Street Through The Election

With out of control inflation throughout the rest of the year.

[Zynx]

6. Historically it is not wise to crank up inflation into an election.

People feel inflation even faster than a downturn.

[Yavin4]

8. You Are Correct. However....

A crashing stock market scares away the White, suburban, middle to upper class vote from the Republicans.

[Zynx]

9. The Fed cut all throughout 2001 and at least once that I can recall in 2002.

The market declined 40% in that time. The Fed is not in the business of bailing out the stock market, contrary to popular opinion here.

[Yavin4]

10. You Just Contradicted Your Own Point

The Fed cut rates like crazy in 2001 and 2002 BECAUSE the stock market was in decline due to 9/11. Those rate cuts brought the market back by 2004/2005 along with a housing bubble.

The Fed has become a tool of Wall Street and the Republican party.

[Zynx]

12. No, the economy was in decline starting in late 2000.

The Fed didn't cut at all during a 40% NASDAQ decline in 2000. They waited until economic statistics were in decline in 2001. By the way, don't buy into the crap that the stock market was not in decline until 9/11. That's simply not true and you discredit yourself if you say it. The Dow had dropped from its all time high of 11,700 to 10,700 by the end of 2000 to 9,600 just before 9/11. It dropped to 8,000 during the immediate sell off after 9/11 and then rallied to 10,700 by March 2002. It plunged irrationally low during the corporate scandals as investors were discounting all earnings being reported due to all of the accounting fraud and the fact that the economy was still growing only around 1%.

The idea the Fed intervenes just for the stock market is nonsense. The Fed intervened to save the economy from an even steeper recession in 2001. If you think their primary concern was reinflating a burst NASDAQ bubble, that's your decision. The fact is the NASDAQ dropped from 5,042 to 2,300 from March 2000 to December 31, 2000 and the Fed didn't lift a finger. There were huge panic sell offs in April 2000 when the NASDAQ dropped from 5,000 to 3,000 in a matter of 5 weeks and the Fed actually made money supply even tighter.

Your argument simply isn't supported by facts.

[Yavin4]

14. My Rebuttal

<<The Fed didn't cut at all during a 40% NASDAQ decline in 2000. >>

Questions for you: 1. Who was President in 2000? 2. What major significant event took place in 2000? and 3. Who would benefit from a major decline in the economy in 2000?

<<They waited until economic statistics were in decline in 2001. By the way, don't buy into the crap that the stock market was not in decline until 9/11. That's simply not true and you discredit yourself if you say it.>>

I never said that. The market was in decline in 2001 and prior to 9/11 because of the 6 consecutive rate hikes from June 1999 through May 2000, and again, I refer you to Question 3 above. Who would have benefited from a declining economy in 2000?

<<The idea the Fed intervenes just for the stock market is nonsense. The Fed intervened to save the economy from an even steeper recession in 2001.>>

Okay. So major rate cuts during a hyper inflation in gas and food prices has nothing whatsoever to do with saving Wall Street. It's just "nonsense".

<<If you think their primary concern was reinflating a burst NASDAQ bubble, that's your decision.>>

No, their primary concern in 2001 was to see to it that Bush's tax cuts got the credit for the miraculous economic turnaround of 2001. However, 9/11 scuttled their plans.

<<The fact is the NASDAQ dropped from 5,042 to 2,300 from March 2000 to December 31, 2000 and the Fed didn't lift a finger. There were huge panic sell offs in April 2000 when the NASDAQ dropped from 5,000 to 3,000 in a matter of 5 weeks and the Fed actually made money supply even tighter.>>

The Fed didn't act in 2000 because THEY WANTED THE NASDAQ to crash. They wanted a declining economy for the 2000 election because they wanted Bush to win, and they wanted Bush's tax cuts to be the reason why the economy rebounded. That was their plan.

[Zynx]

13. My point was also further that the Fed rate cuts did no good for turning the stock market around.

Mark 18 months after the first Fed rate cut and the market was still down considerably. You are confusing the stock market's correlation with economic growth for some Fed conspiracy to keep stock prices high. The Fed has much more to worry about than moves in the stock market. The stock market can spasm 20% with very little in the way of economic consequences from it. However, when the credit markets spasm as they have, then they intervene.

For example, there was a 5-week period between May and June of 2006 where the stock markets around the world plunged and plunged hard. U.S. markets dropped close to 10% and some foreign markets dropped close to 40%. However, the Fed came nowhere near cutting rates. It was of no concern. They, if anything, were closer to raising than to cutting because inflation was running too hot. They intervened in 2007 and so far this year not because the stock market plunged, it really isn't down that much, but rather because the credit markets seized up. That has a real and immediate problem that was reflected in the stock market as corporate credit became harder to obtain and profits were under siege from that and significant write-offs.

[Yavin4]

15. The Timing Is Not Precise Between Rate Cuts and Stock Market Swings

The Fed is a tool of Wall Street and Republican economic policies. They use rate cuts and hikes to effectuate policies to serve either purposes at different times.

When Clinton was president in 2000 and the economy was doing well with far less inflation than today, the Fed hiked rates like crazy from June 1999 to May 2000. Back then, rate hikes were being used to slow down the economy to set up Bush's election.

After Bush was selected as President in 2000, the Fed started cutting rates to time the economic turnaround with Bush's tax cuts. They not only lowered rates, but they lowered them to their lowest levels since the end of WWII.

If you cannot see how the Fed is a tool of Wall Street and Republican economics, then I feel sorry for you.

I leave you with this. Just watch interest rates next year if a Dem is elected. You won't be seeing 1% or 2% rates like Bush got during most of his term.

[newportdadde]

18. Bingo. Get the helicopter ready.

[taught_me_patience]

11. .5%

The fed is there to serve their I-banking masters. They could give a crap about inflation or "ordinary" people.

[swag]

16. Today is the day.

[Stinky The Clown]

17. Fifty basis points ..... minimum

We need to fire Bernanke

[swag]

19. T-minus 25 minutes.

[swag]

20. I am so smart.