Zeev's Turnips Patch-No Politics (ZEEV)

[CryinHawaiian]

Zeev,

Some posters on CS think the deal is already done:

JB,
Did you see the 2 day repo rates?
http://app.ny.frb.org/dmm/mkt.cfm

1.6% average, which is under the FF target, yet only 2 billion in 2 day repos. If they weren't going to cut rates, they would have had to do MSP's to bring the rates up rather than add money in a rate below target, don'tcha think?

That pretty much gives it away, in case there was any doubt.


dcb




From: jamesbon Replying To : dcb (post 248857) Nov 5 2002 4:18PM
Title: Writing all over the wall

Yep, I do check the FF rates traded and total amount submitted from primary dealers to gauge their enthusiastism and eagerness to take risk.
The rate cut has been leaked, hinted and forcasted all over the wall - from Sir Greenspan's and other FED heads' recent speeches, to John Berry of the Washington Post who wrote a front-page story last week that began with this: "As U.S. economic growth remains stubbornly sluggish, some Federal Reserve officials are growing increasingly concerned that unusual developments may be clogging the main channels through which lower interest rates normally stimulate the economy."

The FF rate doesn't stopped at a 25 bps cut, it further anticipates another cut by year end, in the December meeting, albeit with less than 100% priced in so far.

Further more, many economists, include some former FED heads insist that even the FED continues to cut to ZERO, that won't hinder its willingness to cut further through Open Market operation such as Repos to pump liquidity to prop the economy. Finally, they can always turn to the government for fiscal stimulus should the FED runs out of ammunition.

All in all, the easy fiat money policy will stay in place to keep feeding and nurture this new generation of debt loving consumers, the modern day "slaves"

In term of trading against such backdrop, I'd increase short positions as market keep pushing higher with greater expectation. The higher it goes ahead of the 2:15pm Fed time, the greater the chance it will be sold on the news.

Best, jb.