Comments on: The Great Fed-Funds Fake-Out of 2008 http://www.trivisonno.com/the-great-fed-funds-fake-out-of-2008 Bear Market Growls Until January 2010 Sun, 07 Sep 2008 16:03:50 +0000 http://wordpress.org/?v=2.6 By: admin http://www.trivisonno.com/the-great-fed-funds-fake-out-of-2008#comment-502 admin Sat, 17 May 2008 18:02:28 +0000 http://www.trivisonno.com/?p=99#comment-502 Many traders think that a Fed pause equals an all-clear signal to pile into the stock market because it is a signal that the recession is over. I am saying that is a mistake. I'm glad that you like my blog. I try to write interesting things. Matt Many traders think that a Fed pause equals an all-clear signal to pile into the stock market because it is a signal that the recession is over. I am saying that is a mistake.

I’m glad that you like my blog. I try to write interesting things.

Matt

]]> By: Dressguard http://www.trivisonno.com/the-great-fed-funds-fake-out-of-2008#comment-500 Dressguard Sat, 17 May 2008 17:48:40 +0000 http://www.trivisonno.com/?p=99#comment-500 Good points. But is this good for the stock market? If they keep the current rate the pundits could say the crisis is over. If they cut rates again the pundits on the other hand could argue that this is good for the financials which are a leading sector in the S&P. So I don't know right now what to make of your postings. I think you are assuming the FED will cut rates and the stock market will go down. Right? Thanks again for your brilliant blog. I'm reading Bloomberg, CNBC, Reuters, Financial Ninja, Karlsson's blog, Financial Times, Market Preview, RGE (Prof. Nouriel Roubini), The Housing Time Bomb, Mr. Mortgage, Mish's blog, Market Watch on a regular basis. But your blog is by far the most interesting one. Good points. But is this good for the stock market? If they keep the current rate the pundits could say the crisis is over. If they cut rates again the pundits on the other hand could argue that this is good for the financials which are a leading sector in the S&P. So I don’t know right now what to make of your postings. I think you are assuming the FED will cut rates and the stock market will go down. Right?

Thanks again for your brilliant blog. I’m reading Bloomberg, CNBC, Reuters, Financial Ninja, Karlsson’s blog, Financial Times, Market Preview, RGE (Prof. Nouriel Roubini), The Housing Time Bomb, Mr. Mortgage, Mish’s blog, Market Watch on a regular basis. But your blog is by far the most interesting one.

]]> By: admin http://www.trivisonno.com/the-great-fed-funds-fake-out-of-2008#comment-494 admin Sat, 17 May 2008 13:27:21 +0000 http://www.trivisonno.com/?p=99#comment-494 Hi Dressguard, Yes, that is an excellent point, but it is not a point that the Fed is making. The Fed is still pretending that there is no inflation: <blockquote><a href="http://www.federalreserve.gov/newsevents/press/monetary/20080430a.htm" rel="nofollow">"The Committee expects inflation to moderate in coming quarters..."</blockquote></a> ...and... <blockquote><a href="http://www.frbsf.org/publications/economics/fedviews/index.html" rel="nofollow">"We expect that core inflation will rise slightly and then trend down and drop below 2 percent during 2009."</a></blockquote> I think that the Fed is hinting at a pause as part of the campaign to boost the dollar and put a dent in commodity prices, but that is just talk. To really crush inflation, you have to raise rates high enough to crush the economy. And the way that the Fed pretends that there is no inflation indicates to me that that is not in the cards. As long as the Fed pretends inflation is 2%, they are signaling a possibility of more rate cuts. Matt Hi Dressguard,

Yes, that is an excellent point, but it is not a point that the Fed is making. The Fed is still pretending that there is no inflation:

“The Committee expects inflation to moderate in coming quarters…”

…and…

“We expect that core inflation will rise slightly and then trend down and drop below 2 percent during 2009.”

I think that the Fed is hinting at a pause as part of the campaign to boost the dollar and put a dent in commodity prices, but that is just talk. To really crush inflation, you have to raise rates high enough to crush the economy. And the way that the Fed pretends that there is no inflation indicates to me that that is not in the cards. As long as the Fed pretends inflation is 2%, they are signaling a possibility of more rate cuts.

Matt

]]> By: Dressguard http://www.trivisonno.com/the-great-fed-funds-fake-out-of-2008#comment-490 Dressguard Sat, 17 May 2008 03:08:08 +0000 http://www.trivisonno.com/?p=99#comment-490 Hi Matt, thanks for your posting. Very interesting again. One thing you have to keep in mind though is the fact that Greenspan didn't have an INFLATION problem. So whatever the FED will do - cutting or hiking rates - it'll always have a drawback. Either on the consumer or on the whole financial system. Hi Matt,

thanks for your posting. Very interesting again.

One thing you have to keep in mind though is the fact that Greenspan didn’t have an INFLATION problem. So whatever the FED will do - cutting or hiking rates - it’ll always have a drawback. Either on the consumer or on the whole financial system.

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