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And so the cycle repeats
Wednesday, November 07, 2007
On days like today you get the feeling that we'll be seeing the same cycle repeat about every six weeks or so for the better part of the next year.
Does anyone aside from the Fed really believe that interest rates will not be cut when they meet on December 11th? Look at what the three most recent central bank actions have done for stocks.
Aside from countries with a dollar-peg and the tiny fraction of Americans who travel abroad, there has been very little pain as a result of a weaker dollar and a weaker dollar has done wonders for equity markets.
Oil and gold? They are more of an interesting side show at this point.
However, the bad news is that, like any drug that is overused, the beneficial effects tend to diminish with each dose. Perhaps stronger doses will be required.
6 comments:
"Treasury reiterates "strong dollar policy"
I haven't heard that in a while. I think Hank is secretly wishing a good 25% knock out in $'s value to kick start inflation and save the economy.
In the face of all the terrible headlines and all common sense, all the talking heads on TV are saying the worst is over again! I guess it never gets old. The idea that things in the credit markets are going to improve relies heavily on the concepts of Suspension Of Disbelief and Deus ex machina to reconcile the massive problems going forward.
based on your cycle, we've come all the way through again - one through eleven - in just one week.. the next FOMC meeting is a month away.. does that imply an interim cut from the Fed?
Oil is a sideshow? Please.
Oil drives the global economy and turns all U.S. residents into debtors. Every day with oil near $100, it costs the U.S. $1.5 billion to import foreign oil. That's $45 billion per month that we earn and throw down the drain, just gone.
There's never been anything quite like it in world history...a rich nation spending itself into poverty on one commodity.
Whether you know this or not, Tim, the Fed does. They can't let oil go sky high. Their children and grandchildren would never forgive them.
I said oil is an interesting side show "at this point" - as you say, we have not yet begun to feel the impact of higher oil prices. When we do, that's when things will really get interesting and not just here - all over the world.
cbgb: I had the same thought when I was looking at the chart.
Markets down across the board, futures suggesting same for tomorrow. I wouldn't be surprised if Friday brought a new cut.
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