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U.S. Stocks Fall After Fed Cuts Benchmark Rate by Quarter Point

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posted on Dec, 11 2007 @ 04:12 PM
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U.S. Stocks Fall After Fed Cuts Benchmark Rate by Quarter Point


www.bloomberg.com

Dec. 11 (Bloomberg) -- U.S. stocks tumbled the most in a month as investors speculated the Federal Reserve's quarter- point interest-rate cut will fail to prevent a recession.

Bank of America Corp. and Citigroup Inc. led all 93 companies in the S&P 500 Financials Index lower, and homebuilder shares fell the most ever, after the Fed said the housing slump is getting worse.

``It should have been more aggressive,'' said Quincy Krosby, who helps manage $330 billion as chief investment strategist at the Hartford in Hartford, Connecticut. ``The market's instinctive reaction is that it's too little too late and that the Fed is behind the curve.''
(visit the link for the full news article)


Related News Links:
www.cnbc.com
news.bbc.co.uk
www.ft.com




posted on Dec, 11 2007 @ 04:12 PM
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Today is a hard lesson of what happens when the stock market doesn't get it's way.

It wanted a 50 base point.

Didn't get it.

Many are now comparing this to December 2000 where the Fed wasn't on the game and the markets started to decline. With investors now worried about the ability of the Fed to act, we could see more sell off before the new year.

The markets could loose all their gains this year (This is what Bloomberg are now predicting).

www.bloomberg.com
(visit the link for the full news article)

[edit on 11-12-2007 by infinite]



posted on Dec, 11 2007 @ 04:25 PM
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From reading the Fed statement, it's easy to see why the markets have reacted so badly.

Here is the reason;

The Fed has again failed to give any sign it will cut rates again, something the markets want so investors remain confident.

Big mistake.



posted on Dec, 11 2007 @ 04:44 PM
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reply to post by infinite
 


Well it's either pump the market and trash the dollar or vice versa.

I'm not surprised they didn't go with a full half point, as that would likely have killed the pitiful dollar rally stone dead.

I'm surprised the markets reacted so violently though, I guess more were expecting more


Looks like now the rate cut euphoria of the past week is over, we can get back to the real crisis in the credit markets, and perhaps my dow shorts will start to look good again.

With the big banks announcing their write downs this week, it should be interesting.



posted on Dec, 11 2007 @ 06:07 PM
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Update:

Pacific-Asian markets are starting to open up now. Not reacting well to the sell off in New York.

Aussie is down 1.3%
Kiwi is down 1.2%

Japan isn't doing well either, not just cause of the weak Fed cut and the sell off, but Morgan and Stanly have reported the Japanese economy will fall into a mild recession in 2008.

HOLY SUGAR!!

Nikkei is down over 300 points
(thats a 2% drop)

[edit on 11-12-2007 by infinite]



posted on Dec, 11 2007 @ 06:32 PM
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Looks like I should add to those shorts


Dollar looks like it is also about to give back its gains.

I'd buy gold, as the asians seem to be doing, but the idiots in NY keep dumping the metal with the stocks, sheeesh.



posted on Dec, 11 2007 @ 07:23 PM
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Here's an interesting article on the Bond Market and how it's the Wall that the Fed is backed up to. So is it Check or CheckMate? We'll see.
silverbearcafe.com...



posted on Dec, 11 2007 @ 08:02 PM
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Sounds very similar to Jim Sinclair's 'formula' (see jsmineset.com)

Here's big Jim's take on today:


Don't be fooled by today's market. The Fed is running a BLUFF as they are out of aces. There is simply no possibility, way or means of being HAWKISH in the face of a meltdown wherein major financial entities of all kinds are simply going too broke to be rescued. These losses are the largest in my life of 66 years. This is the worst financial crisis in modern history and the degree of liquidity that has to injected into the world monetary system is without precedent. Soon the US FEDERAL BUDGET DEFICIT WILL EXPLODE UPWARDS, THE TIC WILL GO NET NEGATIVE AND THE DOLLAR WILL DROP LIKE AN F-22 IN A VERTICAL DIVE WITH AFTERBURNERS FLAMING.


I did very well listeing to Jim earlier this year, but doubted him when gold was waffling around 670. I sold all my gold futures 2 days before the move began to 850. ouch.

more:



Nothing is improving. Nothing is working out. Banks, institutions, insurance companies and internet financial companies are all calling for rescue, selling themselves to anyone with money to keep them afloat.

This is it!

Never before in your lives have there been such problems, yet many of you still sit on the sidelines not understanding or acting defensively.

This is it!

The plan to freeze rates on sub primes will never survive civil litigation. Bondholders do not care about the homeowner. Bondholders would prefer to liquidate the homeowner now rather than waiting five years, or even one day for that matter, and then maybe getting nothing back. When has finance had a heart for those in trouble?

This is it!

The markdowns you have seen cannot be to market as there is no market. There is much more to come.

Today’s Fed action in the great scheme of things is a non-event.

The Humpty Dumpty dollar has fallen off the Wall and all the King’s men can not put the Humpty Dumpty dollar together again.



posted on Dec, 11 2007 @ 08:05 PM
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You ain't seen nothing yet! I hope everyone went to cash......



posted on Dec, 11 2007 @ 08:17 PM
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Well this is interesting, It seems the OTC gamblers are gambling yet more to try to win back the losses!

www.bloomberg.com...



Derivative Trades Soar to Record $681 Trillion in Third Quarter
By Hamish Risk in London, Bloomberg
Dec. 10, 2007

Dec. 10 (Bloomberg) -- Derivatives traded on exchanges surged 27 percent to a record $681 trillion in the third quarter, the biggest increase in three years, the Bank for International Settlements said.

Interest-rate futures, contracts designed to speculate on or hedge against moves in borrowing rates, led the increase with a 31 percent increase to $594 trillion during the three months ended Sept. 30, the Basel, Switzerland-based BIS said today in its quarterly review. The amounts are based on the notional amount underlying the contracts.

Trading surged as investors bet on losses linked to record U.S. mortgage foreclosures and policy changes by the Federal Reserve and the European Central Bank to offset the credit slump. The Fed cut its benchmark interest rate by half a point to 4.75 percent in September, the central bank's first reduction in four years.




posted on Dec, 11 2007 @ 08:30 PM
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reply to post by RogerT
 


Good analogy. Watching a gambling addict destroy themselves at the tables is like what we're seeing. The scary thing is what's gonna happen in the parking lot afterwards.



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