great vid today, how much data and movement do you think the Fed takes into account going into their meeting tuesday afternoon?

For example, if the dollar ****s diarrhea on tuesday morning, will the fed take those movements into account for their decision?

Everyone sees the stock market crying for rate cuts, but it'd be interesting if FX markets twist the Fed's arm the other way back.

If the Fed is NOT paying attention to the dollar then they're complete idiots.

In fact, I'd go so far as to say that the Dollar is pretty much the only thing that is an absolute "no ****ing way" stopper to rate cuts, because the threat there is that the Fed loses control of interest rates, and once control is lost, it is basically impossible to get back.

Excellent commentary. . . . . pretty much sums it all up at this point in time. . . . Governments bailing everyone out. . . . . America leaning heavily toward socialism. . . . . (never vote for Hillary). . . . .

I always respected Paul Volker "for doing the right thing at the right time". . . . I honestly do not believe that Bernanke's best interests are for the health and growth of the U.S. economy, or for the average citizen for that matter. . . . he is like a marionette, and will do whatever the puppet-masters will him to do. . . so, I would not be surprised to see significant rate cuts (I am at least fairly confident that he will not raise fed fund rates). . . .

Just a prediction that I actually have all my (paper) money riding on. I believe monday will be heavily down in an attempt to encourage a big rate cut.

If it was real money? I'd probably go 50% cash 50% on a major drop monday.

Please don't take my advice very seriously, I'm far too new, but would like to see others comments on this.

The question I have is hasn't this whole rally off of 1370 been on the premise that there will be a 50 basis point cut? The crowded trade seems to be the one that's expecting a rally after the decsion, but it would suck to get caught leaning the wrong way.

Past day trading who cares what the Fed does. The trend is down.

No cut brings immediate sell off.

25 bps FF brings a mild short term sell off with longer term down bias.

50 bps FF brings a several day pop, tanking dollar and then a sell off with a longer term down bias.

Most (all?) recessions we've had have not been stopped with FF cuts. The situation we have set up here is bad and getting worse (housing, inflation, job losses, investment implosions, rising credit losses).

I've been thinking lately. That's usually a bad sign.

It's a general idea of what's going to happen with the trade imbalance between the U.S. and China. China has been trading their shiny things for our dollars to where they have about 1.2 trillion extra dollars hanging around. Their production is married to our consumption. Both are locked in a deadly embrace. According to Peter Schiff, and it makes sense, when the Chinese wake up and start consuming their own products, they won't need us anymore. It's much easier to consume than to produce. The big question here is, how long the hell is that going to take? For the chinese to become consumers.

My grandparents were Italian immigrants from the early part of this century. They didn't consume much, mostly doing whatever they could themselves but they weren't poor. They just saved every penny. Had multiple gardens for food, rebuilt the family house themselves etc. etc. I'm sure you know the type, possibly your own parents or grandparents were like this too. People like this will never become consumers. They don't get any enjoyment out of "wasting" (as they call it).

So, to me this means that the trade imbalance that exists here isn't going to end very soon unless something happens that's big enough to have the same effect as 200 or 300 million Chinese suddenly wanting IPODS.

This whole rally is proof that psychology is everything, as it appears the numbers mean nothing to the traders, the Fed and the government.

Think about some strange moves the Fed might make, like the last time where the move was to intentionally burn the index shorts. Not that these are likely, but, damn, it did happen.

I'm thinking no matter what happens, there's going to be a sell off. The market is already inflated and has taken a cut for granted. How about a coup de grace that both helps the dollar AND helps the market.

Or, just think of it this way, if you want to succeed, just imagine what an average human being would do, then do the exact opposite.

> So, to me this means that the trade imbalance that exists here isn't going to
> end very soon unless something happens that's big enough to have the same
> effect as 200 or 300 million Chinese suddenly wanting IPODS.

Enter the Chinese "Little Emperor" generation.

http://timescorrespondents.typepad.com/s....

You mentioned watching the dollar to see if it craters on Sunday. It seems to me that most of the comments recently by yourself and others here indicate that the FX markets are not leading, but following. That implies to me that you aren't going to see them move one way or another until the FED decision comes out.

The only currency I have been following lately was the Yen. Its movements vis a vis the dollar don't seem to directly correlate to moves or comments by the FED.

The Yen's RECENT moves (which caught me, and its was my own fault because I should have seen it coming) were due to Abe resigning.

My take is that the MKT will be UP BIG on Monday and up BIG on Tuesday until 2:00, then the MKT tanks BIG...There is NO reason for the MKT to be down on Monday..They know that this is probably their last pump and they will take it up until the last minute b4 Fed's decision...If they wanted to force the FED's hand, they would have tanked the MKT this past week....BUT, these are greedy, gluttonous shills who know nothing other than BUY. BUY. buy...

Justin, your account will eventually have a zero balance with your decisions being made from a conspiratorial bent.

It appears to me that in a heavily manipulated market with all eyes turned to the Fed, there are no leading indicators. What it all comes down to is
A)The decision the Fed makes on interest rates.
B)How fast you can hit the buy or sell button as soon as you hear it.

All of the news, all of the speculation, its not about anything other than how the Fed will interpret the tea leaves. Not is inflation alive and well, but how does the Fed judge inflation etc.

Up till this point I have done pretty well ignoring the daily gyrations of the market and sticking with my put positions. Of course there was some real heartburn each time the markets went up, but overall I have benefited strongly from sticking with my positions.

This time seems different (at least relative to the last 6 months during which I have come to the short side of investing/trading. There is apparently so much more fixation on the cost of money.

It's as if the bulls think that somehow cheap money can save us from our mal-investments; the bears feel that sanity must be forced back into the system.

On a lighter note I'm going to get myself down to that HOV 3 day sale and get me a stucco **** box here in San Diego! Nothing like paying 10x median income for something that historically rotates at 4x-6x the median!

Genesis, sorry if you mistook my theory for a conspiracy. What's I'm implying is it seems as though the institutions feel their is no real risk in continuing to bid up the market. They feel that the FED is going to do the right thing and grant a reprieve in the form of lowering the FF rate and they are all front-running on that notion. It is NOT a conspiracy theory but rather a reality when you watch the tape. They are buying almost everything with reckless abandonment. They feel that the path of least resistance, for now, is to take the market higher because if you watch the QQQQ's all day, there is always a BIG bid coming in and small asks. We'll see what happens after the Big Day....I'm in the camp that reality sets in after the FF is NOT lowered and tankeroo after that....

Please go take a look at my recent post in the "Interest Rate" forum.
http://www.tickerforum.org/cgi-ticker/ak....

It suggests that there is a leading indicator - that the Fed funds rate follows, doesn't lead, the 3 month T-bill rate.

The T-bill rate is the lower bound of a channel that the fed funds rate runs in. They upper bound is apparently the 3 month Libor rate.

The "optimum" rate proposed is about 4.94% with current T-bill = 3.88% (discount) and LIBOR rate = 5.65%;

The last time the FED started following the T-bill rate down, was when the spread was at 1.80% (having widened from 1.28% at the start of the 2000 market fall). Right now the difference is 1.37%; suggesting that a 25 bps point cut would drop the spread quite low to 1.12%. So I would suggest that 50 bps is unlikely - just based on this theoretical exercise (which is still based on observations from the real world).

This is my first post and will be my last. I enjoy reading this site and will continue to do so. However, I must take issue with a portion of last night’s Ticker. As KD wrote:

“Now perhaps its just me, but the last time I checked this is part of the "debt slave" issue, where our nation has turned into a bunch of plasma-tv-buying idiots who think that Big Brother (whether in the form of a Union or government - oh, is there a difference? - will take care of you when you get old and gray.) No personal responsibility for your life, for your investments, for anything. Its all someone else's fault - and responsibility.”

I have worked for over 40 years in the clerical field. I and my employers have paid over $219,410 into the Social Security System on my behalf. I had no choice. I was forced by law to contribute this money, as were my employers. I had no say in how the money was invested, and I don’t know if I could have done better investing this money on my own. I am not looking for Big Brother to take care of me, but damn it, I deserve to collect my SSN. KD –are we idiots because we don’t have tons of investments and cash like you do? Quit denigrating people as a whole – there are lots of us who have worked hard, paid our taxes, and now just want to get back some of what we put in. Your Tickers are absolutely fantastic – but generalizations like that suck.

Sorry, they're facts Worker.

You think you "deserve" to get some of your FICA TAX back?

Uh, no.

You were forced to pay income tax too.

Guess what? FICA is just a tax. So says the US Supreme Court - been litigated, been decided.

Your $219,000+ is gone. So is mine; I too have paid in insane amounts of money to the FICA system over the years.

It is not a pension, it is not a retirement plan, it is just a tax.

Welcome to reality; you can either **** your children and grandchildren straight up the ass, or you can accept reality.

If you worked 40 years in the clerical field, you are probably retired now, right?

Guess what - you're not owed any of that FICA money back. It was spent on other government programs a long time ago. It never was stashed or put in T-bills, where it would have earned interest, like a proper trust fund.

Those are facts, and you can either accept them or refuse.

If you refuse, then you are screwing your children and grandchildren.

What you would like to be is not now and never has defined reality.

I feel your pain, worker. You've been the victim of an evil manifestation that is endemic to a system of governance based on force. I want what I've paid in back too, but that is probably not happen no matter how much I'd like for it to. The old saying that you can't get blood from a turnip is true, and unless we flood this nation with younger workers in higher numbers, the sheer scope of the obligations simply cannot be satisfied.

I didn't see what it was in Karl's analysis that you disagreed with. He is dead on the point, but you also have a point that you had the money extracted from you through coercion. The question comes down to whether it is morally right to continue to extract money from the productive members of society at the point of a gun to meet budgetary promises that are untenable and never should have been made. You were lied to and sold a bill of goods. There may be no way to redress this situation without compounding our immoral behavior.

Social Security is insolvent, with utterly no hope of becoming solvent. The sooner you realize this and set about making the best plans you can for your remaining time on the planet, the better off you'll be. Stop voting for demagogues who promise to see to it you get what's coming to you with no regard for the burden on the productive class and the further disintegration to the system. Stop pulling the lever for those who promise to spend the spoils of their theft on your own personal whims. The injustice is not mitigated in the slightest by stealing even larger sums from our children.

If someone breaks into my house and steals my TV, do I have a moral right to steal my neighbors TV? Is the injustice of the situation fixed? Sure..... now I can go back to pacifying my head with mindless crap..... but did I fix the problem or compound it? Now I'm both a victim and a party to the crime.....

My first post too. I'm not a tin-foiler, but am a hard-core libertarian who is basically mistrustful of anyone who wants me to have less rights so that I can be more safe. Personally, I'd rather rely on my own wits.....

Thank you KD and Circ. You really put it into perspective for me.

KD, you've just touched on the biggest misconception about social security- that somehow the government is just storing your money someplace and that you are entitled to get it back. I can't tell you how many times I've had discussion w/ folks who feel that somehow they're owed this money.

Its a tax and I'd love to see it listed as such on peoples pay stubs.

I'd also love to see the employer side taxes listed on folks pay stubs and the tax items totaled and the percentage of gross income displayed.

I think if the average joe actaully realized how much of their income was going out in taxes, there'd be much less resistance to tax cuts and much more focus on government spending.

Jfedak, when I ran my company we had a one-time-a-year mandatory all-employee meeting.

At that meeting I went through, using averages for all hourly workers, how each and every cost item related to their employment worked out.

In it I displayed all "employer-paid" taxes and fees. Every one.

It also included what pay (on average again) would be had those monies not been stolen from them.

Nobody had any of their personal data disclosed since it was all averages. But the point was made pretty clearly..... the first time I did it you could hear a pin drop in there when people realized that if they were getting $10/hour "pretax" their actual pay, just on the taxes alone that they never saw, was closer to $15!

It's amazing how the rest of the so-called developed world is able to provide the equivalent of Social Security and Medicare (for their entire population) without imperiling future generations.

The figures I've seen predicting impending ruin for Social Security lump Medicare together with Social Security. But it's Medicare that has the truly huge deficit. And it's not hard to see why. The US spends at twice the per capita rate for health care for something like 85% of its population as countries like Spain, Italy and France do for their entire populations. And US health care is overall inferior to these counterparts. What's broken is the US health care delivery system. Time to see how the rest of the developed world is able to perform this magic.