Why did the feed really cut the interest rate?
what do they know that we do not!!?did they recieve news that a most important financial institution is about to go amiss?
Answers: No.
They're trying to hedge against inflation. The world financial market are tanking just on the concept of inflation.
New Housing starts are down and banks enjoy no cash to lend. They're trying to pust money fund into the system to helpd borrowers and lenders both.
I'm afraid the question should really enjoy been: What took the Fed so long to cut interest rates?
So my answer is: they're not "ahead of the curve" or "know something we don't." Rather, they're trailing the curve and just catching up.
The mortgage crisis is affecting the world market. China owns a lot of U.S. debt. The Fed have to do something. Inflation has be in the picture for a while. If that be the concern then interest rates would be going up, not down.
You want to curb spending surrounded by times of inflation as I understand it. You cut interest rates to promote spending.
The mortgage lending crisis is huge. It affects everything and the rest of the world, especially as we become more interconnected (globalization). The world market went down rugged. The U.S. is. However, interest rates are a lagging indicator so it's going to lug some time for the full effects to be felt. The Fed is a daytime late and a dollar short.
Edit: We are contained by a mess. Foreclosures are increasing. That means money is tight for bank. Foreign investors are coming to the rescue with money but it's not free. We are surrounded by deep trouble. It's fearsome. What next?
if they have cut interest rate back surrounded by decemeber with 50 foundation point cut instead of 25 bp, we probably won't end up where on earth we are right now..
in a minute they realize after monday's global sell-off, if they didn't do such a dramatic cut, today could be a investigational stock market event, "the crash of 2008 Black Tuesday"
they purely have to lurk till the last minute..
they simply act on actual monetary data, they don't carefulness other factors such as the creeps and panic and psychological factor until after monday's global suspicion kicks contained by. I see this rate-cut is nothing more but to hold on to the market from crashing today.
Do you come up with the U.S. stock marketplace will turn around due to the most recent Fed rate cut?
When do you think the NYSE/Nasdaq will gain some traction? Rate cuts unquestionably don't do anything overnight.Thanks for your replies.
Answers: The Fed cut will help establish a bottom but will not turn around the stock flea market on their own. If nothing else happen the market will time away and then verbs to fall contained by a week or so.
What is needed to make the souk start going up again is confidence and clarity. Traders need to touch they have plenty information on the length and depth of the recession. If everyone becomes convinced it will be over by Q3 the open market will discount it. They want to understand if nearby are any more sub-prime nasties out there. Everyone is looking for the surprises - they don't want to be vanished holding the bag when a ridge goes bust. And someone will budge bust. What's needed is a co-ordinated worst case disclosure from the world's largest bank. Once traders become convinced they understand the worst - however misshapen that is - the adjectives will start to look more cheerful.
Allied with the above the souk wants to see more rigerous support from the Fed and policy. There need to be a series of rate cuts and the right relatives saying the right things at the right time.
It will purloin time - I'm not expecting to see much traction until Q3. In the meantime the market will be especially volatile - it's tin hat time.
It's dally and see. The Fed cut should stimulate some growth for those wanting to borrow money to improve business. Yet we live within a global discount. The US of course is the intercontinental leader, even so there are several players involved in the money activity.
Can someone please explain surrounded by lingo i can infer what is going on near the stock flea market?
I keep reading almost this plummeting and that plummeting and its down 400 points and this and that. What is going on, and what is causing this? Can someone please explain this to me, contained by terms that I can take in?Answers: Fear creates market turbulence. Positive flea market news is see as negative word right now (Fed rate cuts). We are a society that like to think the best and worst surrounded by all situations. In 1999 if you be only getting 15% surrounded by the market you thought you be doing poor. Any news contained by that market be perceived as positive and the market would dive up because of it. Now we are experiencing the opposite, any communication in the flea market is perceived as negative, and the souk drops because of it. Did you know that weather forcaster's on average predict hotter than the actual temp in the summer and colder than the actual temp contained by winter. (Better news story and a bit of human nature) In summary the marketplace is over-reacting to a very small percentage of our cutback _sub-prime lending is smaller quantity than 20% of the lending bazaar, which is an even smaller % of our overall economy. But, volatility creates opportunity.
Turn on CNBC and examine the financial shows such as Market Watch...Power Lunch and Closing Bell. Then watch ames Cramer...he will provide you an education on what is going on.
Bank failure, recession news and down profits adjectives contributing to today loss. FEAR is a huge factor.
Sure! The US economy is within the crapper because of all the desperate mortgages out there and the certainty that people are be foreclosed on! That cause BIG ripples in the pro of real estate and the building market! If houses come available at cheap prices, mainly the mortgage amount and the importance of houses fall, it screw up the building market (with those unmarked home prices to fall) to compete with what you could buy on the foreclosure mkt. When this situation creates dilly-dallying in the stock market, they tumble, because Wall St. doesn't like dithering. So the stock market go in the cistern and the Fed has to lower rates to be paid $$ easier to get and start motivating the housing flea market to move again. You have to remember, that when in that is trouble in the housing bazaar, the rest of the economy can budge into the tank! That's the nutshell magazine, OK!