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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: gregor_us who wrote (7333)	2/8/2004 12:29:39 PM
From: mishedlo	Respond to of 110194

Probably not 2004 but it could happen. I am about the only one here besides you and possibly Tippet that thinks it is possible. We will only do it if Housing starts to go to hell. It will also take a bias change first. Right now, at least they have changed bias to what I would call doveish-neutral from doveish. If they state that disinflation is a greater risk than inflation, or talk about the need to loosen to create jobs, you will have your signal. Right now status quoa. If Europe cuts first and the $ soars and US manufactors bitch, that could trigger it too. I still would expect a bias change first. Mish

To: gregor_us who wrote (7333)	2/9/2004 12:06:42 PM
From: ThirdEye	Read Replies (1) \| Respond to of 110194

Mish, you might well be right about a rate cut. But considering the recent change in language about the Fed bias, the lackluster job market, the claim to have beaten deflation, etc. don't you think a flip like that could potentially be more disruptive to the market than a small hike? It would be an admission that they have been wrong about a few things and that the "recovery" is alot more fragile than their jawboning would have us believe.

To: gregor_us who wrote (7333)	2/9/2004 6:46:47 PM
From: CalculatedRisk	Read Replies (1) \| Respond to of 110194

Lambeth, Your prediction: "Perhaps it's Time To Get Bold Here... ...and predict a Rate Cut by the Fed in 2004, from 1.00% to .75%" I made this same prediction in a "2004 Prediction contest" back in December! But I've changed my mind a little bit. I think the psychological damage of lowering 25 basis points will far out weight any stimulus. So what will the Fed do? I think they will intervene in the 10 year treasury (I think the last time they did this was over 50 years ago ... and that was for different reasons). If they bid up the 10 year (and drop the rate to 3.0%) that will introduce more liquidity AND spark another round of home financing. This would prolong the bubble. Also, I liked your post on Capitalism and Deflation! Best, Bill P.S. My entries in the 2004 Prediction contest (entered in December, 2003): 1) Entertainment: Kevin Costner has a hit movie! 2) Politics: Cheney will NOT run for V.P. due to "health concerns". 3) Economics: After the FED holds the FED funds rate (currently 1.0%) for several months, they will shock the World by lowering rates to 0.75%! 4) Sports: NFL ... DET makes the playoffs as a wildcard team. 5) Disaster: A major 7.5+ earthquake rocks California.