Fed says it's done cutting rates - is this a good sign?

And if so, why did the market tank?

Answers

EthanR answered a question in Economics.
4075 points

EthanR answered one year ago …

I think it's a good sign because it means that the FED feels it is not necessary to cut any further, meaning they don't see the economy weakening enough to warrant another cut. I also think it's good because the dollar needs to strengthen if we are going to see the stock market move higher and oil prices come back down.

I think the market tanked because like children, they want what they want when they want it. Everyone wants rates to be as low as possible. But they may also fear that once rates stabilize, they could go back up. Personally, with this economy, I don't see that happening any time soon.

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warren answered a question in Economics.
546 points

warren answered one year ago …

Ethan I respectfully disagree strongly. The only reason they stopped raising rates is because they have hardly any further to go. They have to save some ammo. They are creating more complex finanacial instruments ie. bailout packages, taking risky assests for loans, increasing TAF's etc...

Keep you eyes openand you will see more fiancial creativity coming all the time. The last 2% is for emergency only.

I don't see them using the 2% ammo, but you never know.

The market tanked? When, it only went down a few %, look at the shanghai it went down like 50% over the winter. The market is going up nominally because of continued tree cutting, keyboard tappin' money printing. Compare the US to Euro stock markets and you will see what's really going on.

Who cares though, either way the precious metals will rise.

Take care Ethan

Warren,

www.preciousmetalstockreview.com

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wiseone answered a question in Economics.
119 points

wiseone answered one year ago …

As the wise ones say, " It all depends." In this case, for example, it depends upon where your money is invested, if you are in the market. I happened to be in one of the financial companies today which, along with other such companies, was simply hammered by this news, coupled with the fears that more people are defaulting on their debts. Since the consumers are not going to be driving up some companies as they were last year ( like HD, for example ) many other sectors such as autos and the hapless airlines may be tumbling too.No a great environment at the moment. But, and there is always a but to consider, there is a lot of cash on the sidelines.

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