I think the market will get softer and softer during this week, as it becomes more apparent they won't cut intr-meeting...There was a rumored hope they were going to cut last Friday around 2:00pm EST, and the market took a turn when that didn't happen...I think the same kind of "hope" exists this morning, and as the day wears on and the FED doesn't do a surprise cut today, before the 18th, I'm thinking the market will turn south again.
I started easing into a teeny tiny amount of Sept. 146 call options for "just in case" there is a surprise cut...I only want very limited exposure to this idea though.
If you bet on a surprise cut you will be throwing money right down the drain. IMHO.
The Fed has the dollar, worldwide credibility and inflation to consider...I do not want the purchasing power of my currency debased...I do not care about those who want something for nothing (ie: people with 2/28 loans about to reset)...who want a bailout so they can continue to drink wine on a beer income, nor do I give a damn about Jim Cramer's hedge fund friends over at Goldman.
The Fed has been boxed, and at most they will move incrementally as to deflect the critics as best they can and there is plenty to criticize...Greenspan created this mess, he is an embarrassment, but now that it has happened, risk does need to reprice, or else we are going to bounce from one bubble to another, the next one will be a reflating of the stock market bubble.
Central bank policy in the USA has been a joke since at least 1998.
In my experience the FED has always had control of our money supply. Lately with private equity and the carry trade becoming the 800 lb. gorilla a lot of the clout of the FED has been reduced. With money moving freely outside of the banking system the FED can mostly look on. Fed funds and discount rate cuts have little effect on mortgage bonds held by European banks. This time it seems and may be different. onesigma
Yeah I agree - and what im /really/ afraid of is if they dont cut at all on the 18th even. Other than the jobs numbers the rest of the macro data has been looking pretty good -- and wit the dollar already dropping below support its gonna be that much harder for them to cut rates agressively.
You pickin on the SPY 146 candle ? I was thinking of starting to build some spreas once VIX hit 20-ish again - and it almost did, but SPY/DIA fell right back into their channels from there and now VIX is up to 28.
I slept in today - its strange just haivng only a token portfolio exposed to the market and 80% cash. I dont like gold going up like this. I dont like bond rates being crushed. Heck I dont like cash either ! (nor do those who went hard into gold).
Yes, I didn't mention it was the SPY 146 call...I only bought a very small amount, because the VIX isn't elevated enough to normally interest me in calls...I'm just putting on a small trade for the "just in case there's a surprise cut before Sept. 18th" kind of thing.
And you're right, if the FED doesn't cut at all on the 18th (and there IS a growing voice in that arena)--then, it's Katie-bar-the-door to the downside! And that's just exactly why I don't want much exposure on the long side. My risk is limited to what I'm laying out.
I'm much more looking forward to when they FINALLY get it over with, or NOT, by the 18th...I think the trading environment will be a lot more predictable---mostly to the downside. Even if they do cut. I don't think it's going to stop the market from going down. At least that's the way it appears to me at this time.
Until then, I can't get excited about much of anything, except cash.
----Do you have any ideas of how this all plays out, and any strategies for "when", "if", and "what" after this rate-cut thing is out of the way?