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Preview: Comments on TraderFeed: Three Key Questions Going Into the Fed Announcemen...

Comments on TraderFeed: Three Key Questions Going Into the Fed Announcement





Updated: 2016-08-14T03:34:09.589-05:00

 



Hi Josh,I think the market interpretation is more ...

2008-05-03T10:59:00.000-05:00

Hi Josh,

I think the market interpretation is more nuanced than that, given the reaction of dollar, bonds, etc. The Fed has paused, but has given no indication of a reversal of recent policy.

Brett



When the Fed lowered rates to rock-bottom level in...

2008-04-30T23:45:00.000-05:00

When the Fed lowered rates to rock-bottom level in 2003 and 2004, the pundits interpreted the market rally then as repsponding to the Fed's easy money and liquidity injection

Then when the Fed starts to raise rates, the pundits explained the market's continued rally as a response to the strong recovering economy

Then the Fed stopped raising rates in 2006, and the market resumed its upward cliam in the summer of 2006. We were told by the pundits that's because "the Fed is done raising rates", so it's time to party - again.

In the fall of 2007, the Fed starts easing again, the market rallied to new highs, and the pundits explained the market is "discounting" the inevitable recovery by going higher.

With the latest Fed cut and announcement, everyone is hoping and anticipating a resumption of the stock rallying party because, again, the Fed is "done" lowering rates.

So, let's see: the market rallies when the Fed is cutting rates; the market rallies when the Fed is raising rates; the market rallies when the Fed is finished with raising rates; the market rallies again when the Fed is cutting rates _again_. When the the Fed is done cutting rates yet again, the market should then rally --again--.

If you think there's something wrong with this picture, congratulations, you still have an ounce of common sense left.



Dr. Brett,I found it odd the dollar dropped, given...

2008-04-30T21:37:00.000-05:00

Dr. Brett,

I found it odd the dollar dropped, given it seems the market interpreted the Fed statement as signaling a pause. What do you think?