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Today's Fed Announcement
#1
Anyone want to make predictions about today's announcement?

I know it should not matter for us long-termers, but for me it is fun to watch and speculate.

Consensus seems to be leaning toward no raise today, because of general caution about the overall economy and no real signs of inflation. Seems reasonable. Folks also seem to think that a raise will cause a market decline, but my guess is that stocks will actually rally around a raise.
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#2
I think before the last week or two I would agree with your thoughts Kerim, but from recent comments I've come across it almost seems like a "raise and rosy outlook" is "baked into" the "markets" right now ...

Who knows and mostly who cares ....

FWIW, does anyone know the option symbol or derivative that people are looking at when saying things along the lines of "the market is pricing in a 27% chance of a Fed raise in Sept" ... ?

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#3
I think a minor rate hike is likely.

We are currently at abnormally low interest rates, so I think the Fed will want to signal their committment to normalizing rates.
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#4
(09-17-2015, 11:08 AM)rapidacid Wrote: I think before the last week or two I would agree with your thoughts Kerim, but from recent comments I've come across it almost seems like a "raise and rosy outlook" is "baked into" the "markets" right now ...

Who knows and mostly who cares ....

FWIW, does anyone know the option symbol or derivative that people are looking at when saying things along the lines of "the market is pricing in a 27% chance of a Fed raise in Sept" ... ?

The numbers come from trading in Fed funds futures contracts. Following is a screenshot of the Bloomberg terminal I found online.

[Image: 69127ab2-9890-48e5-957b-da8b822bf923-620...48f7ff2281]

Whatever the Fed does, we will still be talking about it again in a month or two. If Fed raises rates - next question will be "when is the next increase coming?". If the Fed does not raise rates, next question will be "will the Fed raise rates in October/December?". Rinse and repeat.

I have a bit of cash (~10%) in my portfolio...hoping for some panic in the markets to pick up some high quality companies.

What I do find really interesting is that back in 2008 when the rates were lowered to 0 in 2008, Ben Bernanke said that the rates will stay low for a lonnnnnng time and said that we wont see rate rises until 2015. I have no idea how he could've predicted that back then and 2015 seemed so far far away. And yet here we are talking about rate rises! He must be a wizard Smile

[Image: Bernanke-Fed-QE3.png]
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#5
I'm with you Kermin. Don't think that there will be a raise.
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#6
I definitely have butterflies in my stomach waiting for the news. A good reminder from Uncle Warren though, as Kerim mentioned above:

"I've never made a decision based on what I think the Fed is going to do near-term or longer term. I mean, it just doesn't enter. When we decided to buy Precision Castparts, there wasn't one word of conversation with my partner, Charlie, or with our board of directors about Fed action. And the same thing goes with our purchase of Phillips Petroleum- Phillips 66."
From here: http://www.cnbc.com/2015/09/08/cnbc-tran...today.html

That said...Argh! I have no idea! Possible .25% FF raise. But the damage they wanted could have been done already with the recent market drop.

Because of structural employment issues (rise of automated technology replacing service jobs) I lean toward no raise.
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#7
No raise today!
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#8
Yepitty doo....One things for sure, REITs are happy. Lower cost of capital...

Crazy volatility....I guess we'll get more clarity when Yellen speaks.
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#9
I'll be damned. Angry The Fed didn't jump to keep up with the bond market of late. I'm still ambivalent on whether they bump or not. However, as Dividendsrule noted, the REITs and Utes took it as good news even though a 25 basis point bump was nothing more than a fart in a gale. So now i go back to waiting just when I was going to make TDA a couple commissions richer.

The markets overall didn't seem too impressed as shown in these graphs from Finviz:

   

Looks to me like the initial exuberance quickly wore off as the afternoon dragged on and everything I was getting impatient to add to ended up around the flat line except the above-mentioned REITs and Utes. Dodgy

The asian markets followed through with a down day for the majority with the Nikkei dropping the most at about 2%.

I guess we'll have to wait til morning to see what Europe and the morning futures bring. I was just getting a little enthusiasm built up recording my DRIPs at reduced prices.

P.S. good call, Dividendsrule, on your 1:40pm post. Even got one of the structural reasons why they didn't raise.    
=====
How do they get the deer to cross at that yellow road sign?

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#10
Thanks DWSmile

I feel your frustration, today was an extremely unusual day, the tight whipsawing and then the crazy spike....Very unusual to me. Of course we are not traders here. But the market action...I was a little more bullish and was rather dismayed by the end of day dip. I guess this might trawl out a little bit more, possibly a more jagged W recovery than a V. Could be some sideways choppy markets until end of the year.

Which, incidentally, are perfect markets for us DGIs. We win whatever happens! Money keeps flowing and we can reinvest...So it's all gravy.
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