Discount rate

Seems the fed now has some current evidence of how the discount rate can ‘cap’ year end funding costs for member banks if they remove the ‘stigma’ as recommended. Lending at the discount window jumped to $2.15 billion on Dec. 5, the largest since September. It was the first period that covered ...Read More

2007-12-10 US Economic Releases

Pending Home Sales Total SA Pending Home Sales MoM (Oct) Survey -1.0% Actual 0.6% Prior 0.2% Revised 1.4% Speaks for itself. The fed has more than enough support from the actual data not to cut the FF rate. ♥ ...Read More

Fed’s best move

From the Fed’s theoretical framework, their best move is: ♦ Cut the discount rate to 4.5 ♦  Leave fed funds at 4.5 ♦ Remove the stigma from the window ♦ Allow term window borrowing over the turn ♦ Accept any ‘legal’ bank assets as collateral from member banks in good standing ♦ ...Read More

Where the fed is vulnerable to the press

While Fed gov Fisher was correct in stating the Fed isn’t held hostage to market pricing of fed funds when it makes its decision, the Fed is vulnerable to manipulation when it comes to inflation expectations. Under mainstream theory, the ultimate cause of inflation is entirely attributed to the elevation of inflation ...Read More

Strong $ AND strong yuan?

Reminds me of the guy who loves money and wants to abolish taxes. I do think the push is now for a stronger $, however, and we’ll see tomorrow if the Fed is on board. As a friend of mine pointed out, a firming $ will likely trigger domestic and international portfolio ...Read More

UBS to sell stakes after $10 billion in subprime losses

Another example of a chunk of the losses being contained on Wall Street, and not leaking to Main Street this will now have zero effect on aggregate demand and there seems to be no business interruption. So as long as the losses stay spread out enough to not impair business operations and ...Read More

Balance of risks revisited

“I don’t think that’s fair because I don’t — again, I think I’ve been pretty clear in saying we have an economy in the US that is fundamentally healthy. I think the jobs numbers today showed an economy that is fundamentally healthy. We’ve got very strong demand outside of the US. We’ve ...Read More

Paulson on the dollar

Maybe he knows the fed won’t cut the fed funds rate…. Paulson says economy healthy updated 10:33 p.m. ET, Fri., Dec. 7,2007 SOURCE: Reuters Treasury Secretary Henry Paulson said on Friday Washington was following a strong dollar policy and indicated he expected it to rebound, emphasizing the U.S. economy’s long-term strength should ...Read More

December’s inflation expectations

Inflation 1 year December 3.5% November 3.4% Δ Percent 2.94% Inflation 5 year December 3.1% November 2.9% Δ Percent 6.90% This is most troubling for the fed. The absolute limits of easing for ‘market functioning’ have to be the point of letting inflation expectations elevate. Right now, the fed is likely seeing ...Read More

2007-12-07 US Economic Releases

On 12/7/07, Karim Basta wrote: > > > NFP +94k > Net revisions -48k, with Sep revised from 96k to 44k (lowest mthly gain > since 2/04)But October revised up to 170,000, indicating Sep the low so far, and > improvement since then. And the Fed surely remember Sep 11 meeting > ...Read More