Wednesday, 11/6, Market WrapUp (Fed Surprise 1/2 Point Action Sets Off Bells)

Financial Sense Online ^ | 11/6/2002 | James J. Puplava

[rohry]

"The Fed is now caught in a catch 22 situation of its own making. The more they lower rates, the worse things are going to get. If lower rates don’t resurrect the economy or the markets they will have nothing else to work with then to start monetizing assets, which may indeed come next."

[rohry]

Posting problems again, but Market WrapUp is delivered...

[EVO X]

"The Fed is now caught in a catch 22 situation of its own making. The more they lower rates, the worse things are going to get. If lower rates don’t resurrect the economy or the markets they will have nothing else to work with then to start monetizing assets, which may indeed come next."

Maybe the fed looked here for rate cutting advice:

http://www.news.uiuc.edu/news/02/1104flash.html

This would also help explain why Illinois republicans got their rear end kicked in state wide office elections.

[who knows what evil?]

What's going on with Citibank? Prime drops again, but they RAISED the interest rate that many of their customers are paying on their plastic over the past month or so. Hmmmm...

[imawit]

This is what's goin on. There is a direct linkage between the stock market and the bond market and it is breaking down. and in fact it has completely severed its link.

[imawit]

more alarming for the Fed than a plunging stock market is a plunging bond market.

Did anyone watch the dollar devalue against the Euro ?

If you had billions, where would you put it ?

Japanese treasuries 0%

US treasuries 1.25%

EU treasuries 3.25%

Don't forget the balance of payments needing foreign dollars to come into treasuries and equities in the US.

[arete]

This article may explain why we got treated to the 1/2 point rate cut today. Give it a read and tell me you think.

Odd Farm-Sector Surge Distorts Jobs Data

Richard W.

[B4Ranch]

Whatever gains in the economy that has been accrued from consumer spending has mainly been in the housing sector and in foreign imports. Despite record consumption by consumers, the main beneficiary of that consumption binge has been with foreign manufacturers as America’s traded deficits have ballooned

Manufacturers are a forbidden race in America. The NAFTA agreement says so.

Want to have fun? Get your Congressman or Senator into a NAFTA conversation. They will literally run for the hills when you mention unemployment. Unfortunately it is illegal to shoot them in the back.

[Tauzero]

"What's going on with Citibank? Prime drops again, but they RAISED the interest rate that many of their customers are paying on their plastic over the past month or so. Hmmmm..."

Declining credit quality.

[Tauzero]

On the bright side, a nation of subsistence farmers enjoys full employment...

[STONEWALLS]

"The strength of farm jobs also came as a surprise to the Department of Agriculture,..." ....I expect that many things happening on the farm are a surprise to the folks at USDA.....that's because their emphasis isn't on food production but on food distribution [Food Stamps]

Good luck to everybody!

Stonewalls

[DeaconBenjamin]

Wow, Puplava promotes gold and it goes up $1.60 in after hours trading. ;-)

[imawit]

Where's all the rational exuberance ? Didn't the Fed rate go down ? Wasn't this supposed to be the cure-all ?

Guess everybody got the picture this time. A whole half a point in Fed rate is not a good sign, let alone half a point off of 1.75 points.

[grania]

Where's all the rational exuberance ? Didn't the Fed rate go down ? Wasn't this supposed to be the cure-all ?

This was supposed to be the cure-all, just as all of the previous rate-hikes were supposed to be.

It really inflicts a lot of pain on retirees depending on interest from their savings to supplement their incomes. I'm wondering what happens to fixed income folks when inflation hits (it is in the cycle of economic things that occur).

[Lazamataz]

Everything is so totally screwed, there really is no point any more.

[arete]

Better than totally unscrewed.

Richard W.

[patent]

The dictionary defines insurance as “an insuring or being insured against loss; a system of protection against loss….” I would suggest to most investors that now is the time to think about owning insurance against financial loss. The insurance I’m referring to is gold and silver

. . . .

Bear market bottoms are accompanied by mass selling of stocks by the investment public, which has yet to occur. Dividend yields and P/E ratios are usually between 6-7. To repeat the words of Warren Buffett, we’ve only made a down payment in this bear market.

Are there Gold stocks with P/E ratios below 7?

patent  +AMDG

[rohry]

"Are there Gold stocks with P/E ratios below 7?"

I don't know, I don't own any. Check with Arete or Headsonpikes...

[patent]

Bump for the question in #17. I own one gold stock, but its P/E doesn't seem much better than in the general market to me.

[rohry]

"This article may explain why we got treated to the 1/2 point rate cut today. Give it a read and tell me you think."

I don't know what is behind those numbers. I know REAL unemployment is more than 6%, however. Also, the company that I work for just cut pay rates 10% for everyone (it's a services company, not manufacturing)...