Until today, while the chart wasn't looking all that strong, the 10 day moving average line was at least moving up, and the stock was above the 10 and the 20 day lines. Whether today's pullback causes further weakness will probably depend on the macroeconomic enviornment rather than the specifics of SIVB.
The Fed not cutting rates today hurt some of the major money center banks and the regionals. However, the Fed may cut intermeeting and if not then, certainly at the September meeting is my prediction.
TA--Sept.Fed meeting will most likely not drop rates(the bias may swing that way).I think the Fed will wait until the next meeting to decide. This will give them (i.e. Greenspan)time to see Q3 results as well as corporate views for 2003.Some financial guru (on TV) just said something about Sept. meeting is "too late in the month/quarter"for reduction to have an effect on the numbers". I only half heard his argument but his conclusion was not Sept. If Greenspan has reflected that he ran the rates up too soon too fast--that's an IF- then he may not want to drop too much too soon. Frankly, you could be right or we both could be wrong. I would hope the tax cuts,deficit spending,already very low rates,etc.will slowly move the economy upward without the need to cut rates again.Will be interesting to watch developments... Best, bb
bb, The political winds on the Hill are blowing quite strong. The conventional wisdom on the Fed is that it tries to keep the rate cut timing off the months near the elections. The Philly Fed number was bad, and a profitless jobless recovery, as we appear to be developing, doesn't help many people wanting to work.
Inflation really isn't a problem. I'm more concerned with deflation. If that downward spiral gets started, as it did in Japan, then the consequences are more dire. While the US isn't Japan, there are some real estate valuations here that many think are going to start coming down.
The Fed clearly has room for a rate cut in September. The Markets were pricing about a 60 to 70% chance of a cut in August. If they don't move in September, the Economy is going to slog along as it has been. If something big starts in Iraq, the Fed might think the initial decline in stock prices was due to an irrational reaction rather than underlying weakness. But if the economy is built by at least one leg on the consumer, war on a bigger scale will knock that leg in the knee.
The bias is already towards easing. The Fed did that in August. Cutting rates isn't about saving corporate numbers for any certain quarter. The economic numbers are monthly so let's have some relief now is my vote.