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Offlinelonestar2004
Live to party,work to affordit.
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Registered: 10/03/04
Posts: 8,978
Loc: South Texas
Last seen: 12 years, 9 months
Fed Cuts Rates by Half Point
    #7955362 - 01/30/08 12:35 PM (16 years, 2 days ago)

WASHINGTON -- The Federal Reserve on Wednesday lowered its key lending rate by one-half percentage point, capping an unprecedented eight-day period in which officials slashed rates massively to ward off recession risks.

Officials signaled they're willing to ease still further in coming weeks even though the economy continued to grow, albeit slowly, at the end of last year -- a reflection of the risk management approach to policy that officials have now embraced. But they also suggested that the cumulative 2.25 percentage points in policy easing over the past four months may be enough to keep the economy on track. ...


http://online.wsj.com/article/SB120171951590129343.html?mod=hps_us_whats_news



Stock Market is going way up!


--------------------
America's debt problem is a "sign of leadership failure"

We have "reckless fiscal policies"

America has a debt problem and a failure of leadership.

Americans deserve better

Barack Obama


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Offlinephi1618
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Registered: 02/14/04
Posts: 4,102
Last seen: 13 years, 8 months
Re: Fed Cuts Rates by Half Point [Re: lonestar2004]
    #7956253 - 01/30/08 04:04 PM (16 years, 2 days ago)

Quote:


Stock Market is going way up!



:lol:


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Offlinelonestar2004
Live to party,work to affordit.
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Registered: 10/03/04
Posts: 8,978
Loc: South Texas
Last seen: 12 years, 9 months
Re: Fed Cuts Rates by Half Point [Re: phi1618]
    #7956389 - 01/30/08 04:30 PM (16 years, 2 days ago)

jesus it was up 200 points after the cut! but stocks ended lower for the day???????

WTF


--------------------
America's debt problem is a "sign of leadership failure"

We have "reckless fiscal policies"

America has a debt problem and a failure of leadership.

Americans deserve better

Barack Obama


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OfflinePhred
Fred's son
Male

Registered: 10/18/00
Posts: 12,949
Loc: Dominican Republic
Last seen: 9 years, 18 days
Re: Fed Cuts Rates by Half Point [Re: lonestar2004]
    #7956612 - 01/30/08 05:04 PM (16 years, 2 days ago)

There is a lot of irrationality in the stock market. Always has been, always will be. If it weren't at least partially irrational, it would be predictable, and if it were predictable, we'd all be millionaires.





Phred


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Offlinephi1618
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Registered: 02/14/04
Posts: 4,102
Last seen: 13 years, 8 months
Re: Fed Cuts Rates by Half Point [Re: Phred]
    #7956829 - 01/30/08 05:41 PM (16 years, 2 days ago)

In this case, there's some disagreement among market participants (as always), but the real reason there was no great bump in share prices was that the rate hike was already 80-90% priced in - most market participants were pretty sure it was coming.

Against that, there's continued uncertainty surrounding the bond insurers and the amount of write downs needed from the banks. Just today, Fitch downgraded FGIC and S&P indicated that total losses to financial institutions will total >$265 billion: http://www.reuters.com/article/rbssFinancialServicesAndRealEstateNews/idUSN3024368820080130

This is bad news for anyone who thought that the write downs were over.

The stock market did soar as a result of this rate cut - from Jan. 22, when people started to realize that the 75 bp surprise cut meant a 1.25% total cut, until today, when the few people who didn't already know found out.


Edited by phi1618 (01/30/08 05:43 PM)


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Offlinephi1618
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Registered: 02/14/04
Posts: 4,102
Last seen: 13 years, 8 months
Re: Fed Cuts Rates by Half Point [Re: phi1618]
    #7956913 - 01/30/08 05:53 PM (16 years, 2 days ago)

In case you doubt my assertion that most market participants saw it coming:

http://www.cumber.com/commentary.aspx?file=012708.asp&n=l_mc
Quote:

the Fed announced the latest Term Auction Facility (TAF) offering. It is $30 billion and bids are received tomorrow (January 28) based on the announcement made on January 25. The minimum bid rate is specified at 3.1%. Reason: that was the OIS on the day the TAF auction was announced.

What is noteworthy here is that the Fed has created its own feedback loop. To be consistent, the Fed must cut the Fed Funds rate by at least 50 basis points on January 30. If it cuts less than 50, it will have created a bidding situation in which $30 billion was potentially loaned at a subsidy rate and not a penalty rate.





In other words, once the Fed lent banks money at a 3.1% "penalty" rate, there was no way the non-penalty rate could be left at 3.5% (or 3.25%) - 3.0% was ensured on Jan. 25 (after market close) when the auction rate was announced.

Here's another projection for 3.0 from Jan 23 - less certain than the one above, but still an indication of what people were thinking:
http://www3.uobgroup.com/assets/pdfs/Global_0123.pdf


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Invisiblecarbonhoots
old hand

Registered: 09/11/01
Posts: 1,351
Loc: BC Canada
Re: Fed Cuts Rates by Half Point [Re: Phred]
    #7956928 - 01/30/08 05:57 PM (16 years, 2 days ago)

There is a lot of irrationality in the stock market. Always has been, always will be. If it weren't at least partially irrational, it would be predictable, and if it were predictable, we'd all be millionaires.

Yeah right.

People have to work in order for there to be anything to spend money on. These guys who just make money off of stocks or currency trades or speculation are just helping themselves to the fruit of labour, without actually rolling up their sleeves and pitching in with the hard work it takes to sustain the modern world.

They are parasites.


--------------------
  -I'd rather have a frontal lobotomy than a bottle in front of me

CANADIAN CENTER FOR POLICY ALTERNATIVES


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InvisibleNoetical
Flip Horrorshow

Registered: 11/28/04
Posts: 9,230
Re: Fed Cuts Rates by Half Point [Re: carbonhoots]
    #7957172 - 01/30/08 06:39 PM (16 years, 2 days ago)

?

He was talking market volatility not the ethical pillars that the Wall Street stands on.

Anyways,

I think a lot of people were lulled into a false sense of security over the lack of volatility in the last couple years, and expected unending growth, which to me seems Ponzish and thus foolish.


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OfflineRedstorm
Prince of Bugs
Male


Folding@home Statistics
Registered: 10/08/02
Posts: 44,175
Last seen: 3 months, 10 days
Re: Fed Cuts Rates by Half Point [Re: carbonhoots]
    #7957321 - 01/30/08 07:15 PM (16 years, 2 days ago)

And who is the one who produces the capital necessary to start the businesses that give these grunts jobs?


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