Posted on 08/20/2007 5:58:39 AM PDT by Hydroshock
After a welcome weekend respite from the market's turbulence, investors will quickly learn in the coming week whether Friday's Fed-induced rally was just short-term relief or something more sustainable.
Much of that may depend on whether the Fed's move Friday to slice the rate charged at its discount lending window was enough to loosen the noose around normal lending operations around the world. The credit markets remain the lynchpin for any sustained stock market recovery.
"We are certainly not out of the woods yet," says Mike Malone, trading analyst at Cowen & Co. "The markets will remain volatile ... until the large dislocations in the currency and credit and equity markets are worked through. That will take some time."
But, if the Fed's step shores up enough confidence to quell fears of financial system collapse, perhaps the central bank will have helped the markets sidestep some of the economic damage that can be done when lending and credit seize up for long periods of time. And it will have done so without diminishing its inflation-fighting capabilities by cutting the fed funds rate.
The discount window applies to the short-term rate at which the Fed lends to banks and other depository institutions. The more heralded fed funds rate is used when banks lend to each other. The risks to inflation that have kept the Fed holding that rate steady for a year are still in place.
(Excerpt) Read more at thestreet.com ...
I think the fed will cut 1/4 point.
And watch the inflation rate continue to creep up.
Inflation has come down substantially since late 2005/early 2006. It was running 4-5% for a while, and is now sitting under 3%. Along with the sluggish economy it has given the feds a window to cut rates a bit. We can not afford to tighten credit markets too much. So far the fed is playing it about right.
Okay, those keywords made me LOL.
I did nto do those, some on the board do not like what I have to say.
Obviously you have not priced food lately.
It is just most conservatives are not morbid pessimists. All you post are the most negative stories about the economy you can find.
Are they true of not?
Most are opinions of current news, and most of those opinions do not come true. Usually the news is true, but the stories are grossly distorted to the worst possible scenarios.
And then how do you explain last week?
What happened last week?
The market tanking and the fed bailout.
The market just finished a 10% correction and has started looking bullish again.
Please tell em how this changins teh underlying proplems here. HIgh real inflation, huge fereral deficits, hugh federal debt, loads of shaky loans on house peopel can not afford, massive jumps in foreclosers, troillions in reseting ARMs, and growing consumer debt.
Inflation is not high unless you look at only selected items. The federal debt and deficits are high, but are fixable with modest growth and some spending restraints (OK, that part is a big if). Foreclosures have jumped, but they have jumped from all time lows are really have not reached the point of alarm. Low unemployment, decent growth, modest inflation, solid corporate earnings. Things are not ba, in fact they are pretty good.
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