PDA

View Full Version : Fed cut rate 50 basis points....Market not too happy about it


NaptownChief
03-20-2001, 01:18 PM
as of 2:18 est we are down 29 on the Dow and 10 on Nasdaq....

NaptownChief
03-20-2001, 01:19 PM
Here is the Fed statement for those interested:

WASHINGTON, March 20 (Reuters) - The following is the full
text of the Federal Open Market Committee's statement on
interest rate policy issued Tuesday at the close of its
meeting:

"The Federal Open Market Committee at its meeting today
decided to lower its target for the federal funds rate by 50
basis points to 5 percent. In a related action, the Board of
Governors approved a 50 basis point reduction in the discount
rate to 4-1/2 percent.

Persistent pressures on profit margins are restraining
investment spending and, through declines in equity wealth,
consumption. The associated backup in inventories has induced a
rapid response in manufacturing output and, with spending
having firmed a bit since last year, inventory adjustment
appears to be well underway.

Although current developments do not appear to have
materially diminished the prospects for long-term growth in
productivity, excess productive capacity has emerged recently.
The possibility that this excess could continue for some time
and the potential for weakness in global economic conditions
suggest substantial risks that demand and production could
remain soft. In these circumstances, when the economic
situation could be evolving rapidly, the Federal Reserve will
need to monitor developments closely.

The Committee continues to believe that against the
background of its long-run goals of price stability and
sustainable economic growth and of the information currently
available, the risks are weighted mainly toward conditions that
may generate economic weakness in the foreseeable future.

In taking the discount rate action, the Federal Reserve
Board approved requests submitted by the Boards of Directors of
all twelve Reserve Banks."

((Washington Financial Desk, 202-898-8310))

Tue Mar 20 19:16:27 2001 -GMT- pnac (nN20513822) = 1 19:16

KCTitus
03-20-2001, 01:27 PM
Market really wanted 75...Fed is playing catch up now.

kcred
03-20-2001, 03:23 PM
Well, hell I am losing both ways, another half on my Money Markets, and my Mutual Funds are going to recover. Think I am going to cash in everything, and put it in a tin can, and bury it.

kcred
03-20-2001, 03:25 PM
That should read a half percent off the MM, and the funds are not going to recover. So pissed I can't type.

BIG_DADDY
03-20-2001, 03:35 PM
Greenspan never should have raised rates in the first place. I think that Larry Kudlow put it best when he said that he thought that this was a woos move. It's funny how Geenspan has his cake and eats it too. When technology was overvalued he took it upon himself to straighten out the markets because he was concerned with comments like irrational exuberance and then raising rates. Now that he has successfully driven the $$$$ away from the "NEW MONEY" wich is exactly what he wanted to do, he says things like it is not his job to monitor the markets (just control inflation)and that he doesn't have time to be worried about a bunch of whining traders. Gee, that sure is convenient.

BIG_DADDY
03-20-2001, 03:36 PM
kc red,

HAng in there baby. As long as you don't have ALL of your $$$$ in high flying techs without earnings you will be alright.

KCTitus
03-20-2001, 03:40 PM
BD: Kudlow is the man...Greenspan's 'slowing' of the economy was a mistake and put us in this position. Greenspan alike a lot of other pointy heads think that the economy will 'overheat' if it grows too fast--bunk.

NaptownChief
03-20-2001, 03:52 PM
Titus and Big Daddy

I agree...It is easier to fix a slightly inflationary economy than it is to fix a recession...To Greenspans credit, he did beat the fools out of the market that were chasing every piece of dog $hit with a dot com in their name up to multi-billion dollar market caps which could have been disastrous if it wasn't stopped, but he definitely over did it with rate hikes when there was no legitimate reason to do so.

BIG_DADDY
03-20-2001, 03:56 PM
Titus,

He says that but I always try and look at the flow of money. The bankers are all old money. Old money has and always will, hate new money. There was a whole lotta new money being created and Greenspan did a great job of slowing that down. Now breakup the most powerfull with the anti-trust division. Oil companies are the biggest monopoly in this country and it just amazes me how our politicians turn a blind eye.

KCTitus
03-20-2001, 03:58 PM
jl80, true, but he did it at the wrong time. Many economic indicators were starting to show that the economy was slowing--inventories were rising and many large companies were laying off to make street projections of profitability, the fed was too quick to act to raise rates.

The market, I truly believe, would have corrected on its own if given the time to do so. Investors will only pour money into a black hole for so long.

I thought it funny, the market wanted a 75 bp cut, but most of the pundits agreed the fed wouldnt do it because the stock market wanted it - it would be viewed as the fed pandering to the market, but that didnt stop Greenspan from meddling with the nasdaq when it was drastically overvalued. I think he did it at the expense of the whole economy--not the best economic policy in my book.

BIG_DADDY
03-20-2001, 04:01 PM
jl80,

You can't have your cake and eat it too. The stock market is or is not his job to monitor. You can't just monitor it when you want to and then turn around and say it's not your job. We don't need no freaking banking cartel anyways. By the way it IS NOT his job.

Baby Lee
03-20-2001, 04:16 PM
I don't usually read Cathy the comic strip. But yesterday, she demonstrated the true face of consumer confidence. It is a sad truth that what keeps this economy hopping are rent-to-owners paying 8 bazillion dollars for a 27" TV and flea market junkies paying $500 for a beanie baby.

http://www.ucomics.com/cathy/viewca.cfm?uc_full_date=20010319&uc_comic=ca&uc_daction=X

BIG_DADDY
03-20-2001, 04:22 PM
By the way guys there is a GREAT book on Federal Reserve called Creature from Jekyll Island. You will NEVER regret having read this book. It kind of puts a whole new slant on alot of things.

oleman47
03-20-2001, 04:38 PM
Instead of killing the economy they could have raised margin rates on stock purchases. The bubble was credit driven. As is the whole economy right now which is scary and the amount of money we owe foreigners is obscene. We should pay our debts before some overnight panic wipes us out like the banana republic we have become.

NaptownChief
03-20-2001, 06:51 PM
Big Daddy,

I completely agree with you on the fact that he can't have it both ways...I also agree that the stock market should never be a primary concern of his however with the economy being closely correlated to the markets I believe it has to be a secondary factor that he has to follow.

Frazod
03-20-2001, 06:58 PM
Well, this certainly works for me. This will knock another $50 a month off my upcoming mortgage payments. :D

Glad I don't own any friggin stock right now, though.