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Overnight Bears Fail to Get the Job Done 10/26/22


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19 minutes ago, MisFit Kid said:

of futher note, the Bank of Canada raised rates "less than expected" (.5 instead of .75)......

Canadian Pivot? soon to be followed by the upcoming FED show.....?

 

 

My thoughts exactly +0.5% hike to 3.75% instead of expected +0.75 hike to 4% in Canada is being interpreted as a +0.5% by the Fed next week to 3.5-3.75% FFR. We have EU tomorrow so we'll see if they confirm this pivot. But the real action will be next week.

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It's one thing for Central Banks to "raise rates" less than expected but what about market interest rates?  What is going to keep them down?   Show me the money.

Actually I don't think anyone would care if the FF rate was 2% lower than 90 day Bills. So what? As long as the Fed isn't raising rates then rates aren't rising. I guess. 

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4 minutes ago, Jorma said:

It's one thing for Central Banks to "raise rates" less than expected but what about market interest rates?  What is going to keep them down?   Show me the money.

Actually I don't think anyone would care if the FF rate was 2% lower than 90 day Bills. So what? As long as the Fed isn't raising rates then rates aren't rising. I guess. 

13 week bills are a liquidity „tight-o-meter“. If liqui tight, rates go up. Liqui tight means USD tight, constant demand for USD faces less supply of it, so USD goes up. Interest rates arw just an outcome of that. The process chain starts with less liqui, not with rising rates.

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8 minutes ago, fxfox said:

13 week bills are a liquidity „tight-o-meter“. If liqui tight, rates go up. Liqui tight means USD tight, constant demand for USD faces less supply of it, so USD goes up. Interest rates arw just an outcome of that. The process chain starts with less liqui, not with rising rates.

And if FF are 3% and 90 day Bills are 5% will anyone care?  Care that the Fed doesn't have control. The answer is no. Nobody cares. Nobody thinks interest rates beyond punitive will slow inflation anyway so that medicine is to strong so fuk it. Cross their fingers and hope flation keeps dipping, at least a tiny bit every month.

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1 hour ago, fxfox said:

If we do not start to actually trade bellow the 200week MA for weeks and months, this was never a bear market, but simply a test of the 200 from above, like all the other tests since 2009.

Bullshit. 

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Big bear market rallies are absolutely normal. This one isn't even big yet. 

Bull markets begin when the Fed eases policy, not when traders speculate that it will ease policy. 

FOMC rate actions are irrelevant. A sideshow. 

zbr53

 

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8 minutes ago, DrStool said:

Big bear market rallies are absolutely normal. This one isn't even big yet. 

Bull markets begin when the Fed eases policy, not when traders speculate that it will ease policy. 

FOMC rate actions are irrelevant. A sideshow. 

zbr53

 

When things start looking like this and the Fed has already cut rates at least a couple of times...

Ff9DxJrX0AAJH2h.jpg

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The market and the economy respond to changes in monetary policy. The markets respond instantly. The economic data responds with an apparent lag. The actual economic response is faster but less pronounced. It's like turning the Queen Mary.  

Actually, the Queen Mary pivots on its 4 rotating motors. 

The point is that trying to guess what the markets will do by analyzing economic fundamentals is an utter waste of time. The financial market responses to monetary policy come first, and they are bigger. 

Keep in mind that it took a couple weeks for the markets to respond to pandemic emergency QE. Any longer and it could have been catastrophic. Will the investors be as fortunate next time? 

 

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