Posted on 11/28/2007 12:14:44 PM PST by rightinthemiddle
Wall Street Has 2nd Straight Rally on Rate Cut Hopes, Signs That Financials Are Finding Cash
NEW YORK (AP) -- Wall Street barreled higher Wednesday for the second day in a row, propelling the Dow Jones industrials up more than 300 points after a Federal Reserve official hinted that the central bank may lower interest rates again.
Investors' renewed hopes for a rate cut added to their relief that companies that made losing bets on subprime mortgages, such as Citigroup Inc. and Freddie Mac, are coming up with ways to raise cash.
Early Wednesday, Fed Vice Chairman Donald Kohn told the Council on Foreign Relations that recent financial turbulence has reversed some of the improvement seen in markets in previous weeks, and could squeeze credit for households and businesses. He said tight financial conditions may merit "offsetting" policy from the central bank.
(Excerpt) Read more at biz.yahoo.com ...
The fed opened the door for a further interest rate reduction. I don’t see how that doesn’t bode well for gold and bad for the dollar long term.
But, but...oil prices! And the housing bubble! And housing price crash! And flat Chrismas sales! And the credit crunch in March from the, um, from all the Christmas sales..
Oddly, no, not directly. Most ARMS are calculated based on an index called LIBOR (and published in the WSJ). RnR will know.
Hahaha... just stating the truth.
Rate Cuts only do so much... I know it excites the emotional folks on wall street, but much of the issues we are facing are not related to rate cuts.
Not only that, but with every rate cut they do enact, you will see the dollar further slide against foreign currencies.
Bear market rallies are vicious, as are topping rallies.
Early 2000 had a rally that somewhat outdid this one.
We all know what happened next.
No, The FR goldbugs said gold was going to $2000.
A rate cut! Yipppeee!!!
Inflation here we come!!
I don't think the author is correct, that this is a rally based on an expected rate cut.
I think this is a continuation of yesterday's rally that had 3 reasons
1. strong holiday sales
2. Abu Dabi stepping in with their petro dollars
3. stocks were getting too cheap.
I hope they raise rates and send all these fools to the poor house!
The U.S. has to cope with some of these factors, but to a far lesser extent than Japan did.
How does this differ from what a large fraction of people on here want for this country?
Fixed rates are based on the 10 year bond as well.
Generally, the LIBOR follows the Prime rate but there is no direct correlation.
I don’t follow it closely but three-month LIBOR rates are up today, and most days.
That's the part I was getting at (or trying to...).
I’m not implying the US is Japan, I’m just point out that rate cuts are limited in their impact, and the mess of the housing and credit crunch are not going to be alleviated by a rate cut.
There was a long run of good times, and now the piper will be paid. Fed can do things, but it can’t eliminate this.
At the end of the day, the bulk of the economy can be traced back to real property... and the value of that is contracting and going to continue to for quite some time. Rate Cuts won’t change that.
"HEY, you idiots... You can't make the markets go up, we've got BIG problems here!"
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