Re: FOMC
On Aug 7, 2007, at 3:07 PM, Michael Pollak wrote:
Very funny, that last line :o) But in all seriousness, hasn’t it been front page news over the last week that the futures markets have been pricing in a near certainty of a rate cut before the end of the
year, and the high probability of two (quarter-point) cuts? So what is more
hawkish than you expect must be hugely more hawkish than they, the all-knowing markets, expected, no?
I think the Fed takes a more class struggle long view of things than
do the markets. The Fed looks at a 4.6% unemployment rate and thinks
“[dangerously] high rate of resource utilization.” The markets see
some hedge funds blowing up, sound off like Cramer (finally got
around to watching that - what a lunatic), and expect the Fed to come
to their rescue. The Fed won’t ease on a financial panic unless it
looks like it’s system-threatening. Barring that, they won’t ease
until the unemployment rate approaches 5%.
Doug