Special offer

IS A FED (FUNDS) RATE CUT COMING SOON, NOOOOOOOOO!

By
Mortgage and Lending with Christensen Financial Mortgage 385907

It seems that many investors are already reacting like a rate cut is in the making, almost guaranteed. Frankly, I don't think so. But I could be wrong, but I don't think so.

Why not, you may say?

First and foremost it's not going to happen just because some in the financial markets might like it to. You can't just wish it to happen and presto, it does.

The Feds greatest concerns on an ongoing basis are inflation and employment. Inflation seems to be okay or acceptable, not necessarily putting pressure in either direction.  Unemployment claims for the last 2-3 weeks have declined.

Let's throw in, just for fun that CNNMoney.com reported this morning that new home sales were up 2.8%. A decline was expected.

But, but, Jay what about the subprime situation? We need help.

The Fed Chairman has plainly stated on more than one occasion that he is not inclined to bail out the financial sector which caused this problem. Furthermore as more details become known it appears that the problem is nicely spread out not just across national markets, but across global markets. Last week it was French and German institutions fessing up to their true exposure to subprime investments. Today the Bank of China disclosed that their subprime related holdings were in the $11.25 B range. Three other Asian banks Singapore's DBS Holdings Group, $1.6B, Taiwan's Cathay Financial, $3.3B, and Commercial Bank of China, $1.23B, were nice enough to admit that they too were helping to share the burden.

Two issues come into play here: the first is that there is still some uncertainty as to the extent of the problem, and second  the burden of the problem clearly appears to be spread out nicely across the global markets.

I could be wrong, BUT this picture I'm looking at currently is not one that is conducive to a rate cut.

Therefore, it may just be one man's opinion, but September will come and go and

THERE WON'T BE A RATE CUT!

 

 

ps; you may want to bookmark this page to blast me later if I'm wrong. (but I don't think so)

 

 

Beth Bastian
Rosemont Financial Inc - Simi Valley, CA
Simi Valley Real Estate
It's still hard to say our fed changes there mind every other day.  It will be a shock if they keep there head in the sand and send this country into a recession.
Aug 24, 2007 03:20 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

Beth,

i agree that both the fed itself and the data changes on a daily basis, but i don't believe the basic philosophy will.

so far we have withstood the subprime scenario and i believe will will continue to do so. i don't feel there's a recession in site.

jay 

Aug 24, 2007 03:30 AM
Anthon Pang
iPro Realty Ltd., Brokerage - Toronto, ON
Broker

The Federal Reserve's recent 0.50% cut was pretty aggressive, IMO -- so I'd have to agree that another reduction, so soon after, is unlikely (though still possible with "rookie" Bernanke on the hot seat as political pressure increases).  The economic effects of rate changes aren't entirely immediate, so the Fed may wait-and-see.

That said, the latest market shock is exposure to asset-backed commercial paper.  All of this is spilling over into Canada, so in contrast, I think a rate cut by the Bank of Canada is increasingly probable.

 

Aug 24, 2007 04:05 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

Anthon,

a discount rate cut is largely symbolic without a great deal of impact and has nothing to do with a funds cut which has an immediate and potentially powerful impact over the markets.

i would not underestimate bernanke (rookie), and it's not likely that he is going to be influenced by political pressure, especially as that at this time the white house position is to not bail out the financial markets.

jay 

Aug 24, 2007 05:11 AM
Joan Mirantz
Homequest Real Estate - Concord, NH
Realtor, GRI, CBR, SRES - Concord New Hampshire

Spoilsport!!

Hey, It's starting to smell like Fall around here....but the leaves haven't started yet.

Aug 25, 2007 03:33 PM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!

Joan,

i call em like i see em. i could be wrong, but i don't think so.

how far north to get some color? i'm very much looking forward to pictures.

when i was at UNH we used to go to football games at Dartmouth. it was so beaytiful.

jay 

Aug 26, 2007 02:41 AM
Joan Mirantz
Homequest Real Estate - Concord, NH
Realtor, GRI, CBR, SRES - Concord New Hampshire

Actually I've been surprised that there haven't been some changes yet! It's been a wet year and I wonder if that affects it? Maybe for the better?

Don't you worry...I'll do LOTS of pictures!

Aug 26, 2007 04:18 AM
Jay Beckingham
Christensen Financial Mortgage - Port St Lucie, FL
Seniors ROCK!
thanks Joan
Aug 26, 2007 04:20 AM