I have a suspicion that Mr. Moto is actually David Tice!!
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prudentbear.com
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Confusion
Posted By: Mr. Moto
Date: Tuesday, 1/11/0, at 3:09 p.m.
I'll attempt to stipulate near-term or intermediate-term monetary prospective from here on. It seems to be causing some confusion. And I appear to be contradicting myself. Maybe this will help.
INTERMEDIATE TERM (6 months)
So, the Fed is not feeding the speculators as they have in the past, but neither is it brightening the bearish prospective. The current policy conduct is very timid. If the Federal Reserve wants to slow the creation of credit and, therefor, money, they MUST RAISE INTEREST RATES.
It's quite possible the Fed should have hiked once more already. That action, however, would be an admission pre-Y2K policy was too loose and strike a blow to the Fed's ego.
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NEAR-TERM (pre-February)
The Fed put a temporary drain on while the interbank rate was 25 bp above their target. The same condition prevailed yesterday -- 25 bp > target. The disposition, therefor, is tighter than it has been for sixteen (16) months. Under the same circumstance at any point within the past year, the Federal Reserve would have added reserves.
Fed not damaging the bears, and not aiding the bulls, equals very bearish. Not bearish, very bearish.
Too, the Fed at this point can not make a one-eighty to assist the markets without instigating inflationary consequences more than they have already and badly damaging the debt market. Unless the FOMC calls a special meeting and raises rates prior to February, the bulls are in for a beating.
I haven't confirmed it yet, but the commercial banks may have cut-back on one of Mr. Tice's favorite categories -- repo loans and loans to purchase and hold securities. Where did they get the money to increase that service so drastically in the first place but from the Fed's Q3 credit deluge? Quite understandable, now, that they forego any further credit for that purpose.
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You can see in the near-term assessment consideration of more immediate circumstances. My apologies for the mix-up. |
