Posts filed under “Credit”

Bernanke Blinks

Fedfunds FOMC Chair Ben Bernanke surprised me (and apparently, quite a few others) by slashing both the Fed Funds Rate and the Discount Rate 50 bps each.

Markets loved Larry Kudlow’s "shock & awe," with the Dow rallying over 300 points on the session. Yield on the 10 year is now well below 4.50%.

Why did Bernanke blink? "The tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally." The hope is today’s action will "help forestall some of the adverse effects on the broader economy" that could arise from financial market disruptions.

The flip side is concerns about inflation. The FOMC statement read "Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully."

As to the Dollar, Oil, Gold,  soft commodities: We’re long them all (‘cepting the greenback) through one asset class or another.

The Fed now has a third problem to deal with: They have become Wall Street’s bitch. They may find that’s a difficult condition to wriggle out from . . .

For more details, see:

Christmas in September   

http://www.thekirkreport.com/2007/09/christmas-in-se.html

Jim Rogers, Faber Say Fed Rate Cuts Will Spur a Recession     http://www.bloomberg.com/apps/news?pid=20601087&sid=aYBOOiT5mAO0&

Economists React: ‘One and Done’?     http://blogs.wsj.com/economics/2007/09/18/economists-react-one-and-done/

Half-Point Surprise
http://blogs.wsj.com/marketbeat/2007/09/18/half-point-surprise/

Who Messed Up the Markets: Hedge Funds, Greenspan?    http://blogs.wsj.com/deals/2007/09/18/who-messed-up-the-markets-hedge-funds-greenspan/?mod=homeblogmod_dealjournal

Former Fed Chair Alan Greenspan: the era of low inflation is over    http://bigpicture.typepad.com/comments/2007/09/ironic-quote-of.html

The Fed is Spooked   
http://bonddad.blogspot.com/2007/09/fed-is-spookled.html

Fed Funds Rate Cut: Watch Long Rates   
http://calculatedrisk.blogspot.com/2007/09/fed-funds-cut-watch-long-rates.html

FOMC Statement
http://www.federalreserve.gov/newsevents/press/monetary/20070918a.htm

Category: Credit, Derivatives, Economy, Federal Reserve, Inflation

Nine Reasons the Feds Can’t Save Stocks

Category: Credit, Derivatives, Economy, Federal Reserve, Investing, Markets, Psychology

Greenspan’s Legacy

Category: Credit, Derivatives, Federal Reserve, Investing, Real Estate

The Fine Line Between Investment Grade and Junk

Category: Credit, Derivatives, Federal Reserve, Financial Press, Hedge Funds, Psychology, Real Estate

Real Estate Inventory Still Building

Category: Credit, Data Analysis, Psychology, Real Estate

Martin Feldstein on the Housing/Credit/Economic Mess

Category: Credit, Derivatives, Federal Reserve, Hedge Funds, Inflation, Psychology, Real Estate

NINJA Loan

Category: Credit, Federal Reserve, Real Estate

A Thought Experiment

Category: Credit, Derivatives, Investing, Markets, Trading

Recursion, Reflexivity, Feedback Loops & the Fed

Category: Credit, Derivatives, Federal Reserve, Inflation, Investing, Markets, Psychology

Five Reasons Why the Fed Will Cut Rates

Category: Credit, Derivatives, Federal Reserve, Inflation, Psychology, Real Estate