Feds poised to cut interest rates/ may take a break after that

[run2Jesus]

http://news.yahoo.com/s/ap/20080429/ap_on_bi_ge/fed_interest_rates

[run2Jesus]

WASHINGTON - The Federal Reserve is poised to deliver another interest rate cut to millions of people and businesses this week, although that could be the last break they get for a while.

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Fed Chairman Ben Bernanke and his colleagues open a two-day meeting Tuesday afternoon to take a fresh pulse on the economy and decide their next move on interest rates.

The Fed is widely expected to lower its key interest rate by one-quarter percentage point to 2 percent at the end of its session Wednesday.

That would mark a modest rate reduction after a recent string of hefty cuts. The Fed is facing a difficult juggling act of trying to shore up the faltering economy while also trying to keep inflation from taking off.

In response to the Fed's expected action, the prime lending rate for millions of consumers and businesses would fall by a corresponding amount, to 5 percent. The prime rate applies to certain credit cards, home equity lines of credit and other loans. Both rates would be the lowest since late 2004.

Economists think the Fed may be inclined to leave rates at such low levels possibly through the rest of this year and maybe into next year.

The Fed started cutting rates last September to
more above..

[Glory]

Didn't jds say that after the FEDS cut interest rates again, we'd go into HYPERINFLATION?! I think he said that in his last post. :panic

[cbressler1976]

:panic

[Glory]

Yes, on 3/12 I called market bottom, stating that the markets should go up from there or hold stable (DOW between 12k and 13k). Even earlier in the thread I said it was possible that an 18k DOW could happen by early 2009 depending on inflationary pressures.

We need to see what the FED is going to do with the rates or the reaction to the next economic event.

I still believe the FED will not let the DOW go below 12k, although it may make another attempt.
In March it was a little easier to know what April was going to look like.

I really believe we are on the foothills of hyperinflation here. Speculation is everywhere right now and it is transfering wealth to a lot of opportunists.

The markets are speculating that the FED is finished cutting rates and may raise rates .25. Normally that would be bearish for the markets, but this time Mr. Market is saying "hmmm, all that is bad must be about over"

The only reason that there is speculation for a rate hike is because of inflation. I do not believe the FED will raise rates here. They may pause to play the see saw and buy us some more time, but raising rates would absolutely kill the financial and housing industry, it would redefine collapse.

The FED is not done cutting rates in my opinion. That will short circuit and confuse the equity markets and I would expect volitility both ways for a little while as the markets digest that. PM's and oil will then resume their upward trend, but at a quicker pace. PM's have a rate hike now priced into it. If the FED drops rates, PM shorts are going to hurt.

Inflation is everywhere/global, except in U.S./U.K. housing for now. I expect this to continue. We must remember, even with the markets current actions, that when real inflation is factored in, that the equity markets topped out in 1999/2000. The equity markets may be going up in the price of USD's but down in terms of average purchasing power. That will not change, regardless of how high the stock markets go, a person's dollars will be better elsewhere.

The money supply is growing about 20% more than economic growth right now. This is highly inflationary and has not yet even begun to really influance prices. If this does not stop soon, then we have not seen anything yet.

Our deficits are increasing, housing is still getting pummled, oil/gas/food (energy) are increasing at an alarming pace, salaries are stagnet, the equity market is stagnet/confused, companies and whole sectors are going bankrupt, many that are not yet bankrupt are just because they have creative time buying accountants, the trucking industry is about ready to collapse (I mentioned this a few pages back), airline problems are far from being over, travel destinations are/will be hurting. The next level of support for our economy appears to be a bottomless pit. We are nowhere close to a recovery.


jds is always right. He's been right on target throughout this whole mess.

[jds6958]

Didn't jds say that after the FEDS cut interest rates again, we'd go into HYPERINFLATION?! I think he said that in his last post. :panic

I don't know if it would be that immediate but I believe we are still on that path. We are certainly on the same path as we have been since August.

If the Fed fails, we will see massive deflation. If they "succeed" (by their own definition) then we will likely see massive inflation.

Just my opinion, but for the most part, I believe we are already on the foothills of massive inflation. We are at a critical moment. The rubberband is stretched about as far as it can go. Either the FED will let the rubber band go and the economy will be flung down into a seemingly bottomless pit (deflationary depression) or they will pull harder until the collective psychological tipping point (it snaps) is reached and it will be a mass exodus out of the USD causing massive inflation and causing further inflationary panic and hoarding. We do not have the inventory available for a hoarding mentality imho.

[jds6958]

jds is always right. He's been right on target throughout this whole mess.

I mess up details here and there for sure, such as exact timing. For instance, gold may be at a head and shoulders pattern here which would support a continued correction into 800-850 before its resumed climb upwards or it could be a double bottom and climb up very shortly. As of today, it looks as though it could have been a H&S pattern. I am making some small purchases today anyways even though it could correct a little more.

The overall path seems to be on target. I can not take full credit for all of my statements. I "borrow" expertise from here and there and try to determine what makes the most sense. I neither hope I am right or wrong, but just try to call it like I see it and allow opportunity for others to present their opinions in agreement or disagreement. At the very least I hope to help facilitate critical thought about the crisis but I try to refrain from making absolute recommendations, although, I admittingly have been pretty strong in my recomendations for food, supplies, and PM's at a most basic level.

[jds6958]

http://news.yahoo.com/s/ap/20080429/ap_on_bi_ge/fed_interest_rates

Here is a partial messege of a PM I sent someone last night that speaks to this speaks to the content of this news release and its impact on PM's. I bolded some of the points that speak to this news release.

Quote:
Yes, I would be interested in hearing the reasons why metals corrected as they did. It would be greatly appreciated if you could pm me your thoughts whenever you have a spare minute. I know your very busy. Like I said, I know what I'm doing is right, I'm just having a hard time understanding why pm's are correcting the way they are.

Blessings!

(Name Deleted)

Absolutely...no problem...

Once gold hit the $1k pschological monument mark it was at risk for correcting as the collective masses would try to call that the "top"

It was possible that gold could have broke through 1k and kept going, but it would have taken more than just Bear Sterns imploding to give it enough support at 1050.

The Fed / media played things well and went on a mission to convince the masses that the worst was now behind them. That was negative for gold and great for the equity markets. Because gold just hit 1k it was ripe for a massive self off once the psychological spin the Fed was releasing took hold...and drop it did...it made a short bounce, but it did not have enough in it to come close to hitting 1k again...it needs to break 960 to get the bulls excited again...

This time the Fed starting putting out rumors that it is done cutting rates or may even raise rates...that is enough to scare all of the gold bulls as that would be a case for a stronger dollar...I believe that it is all talk by the Fed...they do not like to see gold going up because it speaks poorly to our economic condition...I do not believe they can raise rates, unless we want houses selling for about $5 in the U.S. They may get away with pausing the rate cuts again, that would not really surprise me. If they do that then gold will indeed drop some more. They will have to resume cutting rates again though if they do that, likely with an emergency rate cut. More likely, the next rate cut will be .25 and they will say "this may be the last one" which it will not.

This is exactly what the article stated. A .25 cut and then no more. I don't believe it. They are just trying to save ammo. If another economic 9/11 occurs (Bear Sterns) they will need to make a full percent rate cut or more. As soon as they run out of ammo, it will get real ugly. They would like to delay that as long as they can.

Continued...

They don't have much more rooom to cut since we are near the 2.0 level. They can not use up all of their ammo yet...another Bear Stearns event could happen and they would not have any shock and awe cuts left...we are getting down to the wire here...in 1-3 months the Fed will either completely fail and we will see massive deflation (great deppression x10) or they will succeed and we will see massive inflation. I believe we will see massive inflation, and then massive deflation after all of the chaos, riots and geopolitical events...hopefully we will be out of here by then...

I hope that helped...I somewhat rambled because my brain is shot for the night...have a good evening...

Take care and God bless......

It is a rather odd feeling that after watching the Fed during this crisis which such intensity that it almost becomes instinctual to know what the Fed's reaction and statements will be.

This is really just my opinion and thoughts...other thoughts are welcome...I could be wrong...

[Issachar]

... it will be a mass exodus out of the USD causing massive inflation and causing further inflationary panic and hoarding. I believe that the only reason we haven't seen massive (price) inflation over the past few years despite the massive "money" supply inflation is due to all those dollars being "soaked up", so to speak, by foreign countries; basically giving all those dollars a home. When there is a mass exodus out of the USD, they won't have anywhere to be ... just "extra" and, as you say, massive price inflation.

Issachar

[jds6958]

I believe that the only reason we haven't seen massive (price) inflation over the past few years despite the massive "money" supply inflation is due to all those dollars being "soaked up", so to speak, by foreign countries; basically giving all those dollars a home. When there is a mass exodus out of the USD, they won't have anywhere to be ... just "extra" and, as you say, massive price inflation.

Issachar

Exactly...thinking fall or winter at the earliest...after Olympics...could be sooner if things go very wrong...if not then, then 2009 is highly suspect...no reason to "soak up" additional USD's if the U.S. can no longer support their interest...abrupt global U.S. decoupling at that point...USD inventories will be "spent" asap...