Goldman, JP Morgan See Fed Cutting 50 Bps in Jan

Goldman, JP Morgan See Fed Cutting 50 Bps in Jan

www.reuters.com

NEW YORK (Reuters) - A sputtering job market has convinced economists at key U.S. investment banks that the Federal Reserve will need to resort to a steeper half-percentage point interest rate cut when it meets later this month.

Both Goldman Sachs and JP Morgan said on Friday they now see the Fed slashing the benchmark federal funds rate down to 3.75 percent from the current 4.25 percent, with Goldman also considering the possibility of an intermeeting move.

Goldman sees three further rate cuts after January, of 25 basis points each, bringing the fed funds rate to 3.00 percent by mid-year.

(visit the link for the full news article)

Well Goldman should know

Looks like the limp dollar rally will soon be over, better start loading up those shorts again.

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

Goldman (the only one to anticipate this credit/mortgage baloon)
might be right...
the Banks discount rate could be cut by 50 basis points -

but i'm figuring that the pprime lending rate for the masses of consumers/credit junkies will only get 25 basis point hair-cut....

why ?, well because the Fed can't let the US rates get Waayyy
behind the LIBOR rates--- or the USD gets flushed further down
the toilet in relation to the Euro & Pound...and all other currencies also.


these other financial blocs of nations, all overthe globe, are not going to allow the Fed to devalue the dollar any more than the present level...
(as each rate cut results in a less valued dollar.)
or all their trade balances with the USA which were once profits will disappear as the dollar goes down to .70 cents in buying power...
as a result their surpluses dwindle by 30% of the old value they were expecting to cash in on...

as in; a 1$ billion surplus is thus reduced to only $700 million of a Devalued USD--- and its getting devalued evey time the Fed does a rate cut in opposition to the EU or Swiss or Saudi or Russia or China money systems ...




[edit on 7-1-2008 by St Udio]

but i'm figuring that the pprime lending rate for the masses of consumers/credit junkies will only get 25 basis point hair-cut....

reply to post by St Udio


Well said. The Fed is irrelevant now. Dropping the short term rates screws the long term rates, which are the only thing that could possibly drive the debt ridden american household to refi one last time.

Edit to add: They are relevant in the sense that they can still destroy the dollar. They will cut off 'our' (the american people) nose to spite 'our' face. They've already got their money in commodities I'm sure.

[edit on 7-1-2008 by HimWhoHathAnEar]

With all my years working on Wall Street and now in Mid-town, I have never seen a blinder FED. They are cowering to Wall Street, almost bending over asking what they want.

I say the FED should grow a pair and NOT cut the rates at all. Let the markets work things out. Let a few banks pay the price for over zealous lending and let a few bad companies fail. A good cleaning and nice wake up call is what these companies and the market needs.

I am a buyer when the DOW trades 12,000 and the S&P trades 1325. Until then I am remaining short. I have been short since May and have begun covering positions that are up 50%. I am currently still short 13 positions. All housing or financial related (although some might have to be explained how they are housing related). I will be more than happy to share that list, but not on the message boards.