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Wednesday, February 20, 2008

Fed Losing: Rates Rise Again

I recently mentioned rising rates in Fed Cuts: Market Raises Rates

Looks like Mr. Market is giving the Fed a run for its money...

In the FOMC Minutes, the Fed said that participants agreed inflation data since the December meeting had been "disappointing", but that slow growth should relieve some of the pressures. Unbelievably, in the same breathe the Fed raised its core inflation forecast for 2008 to 2.0% -2.2% from 1.7%- 1.9%. The Fed also lowered its 2008 GDP forecast to 1.3% - 2.0% from 1.8% - 2.5% and raised its unemployment rate expectation to 5.2%-5.3% from 4.8%-4.9%.

Somehow this got the Bulltards out in full force and EVERYTHING, excluding fixed income, went bid. Equities. Commodities. Across the board.

A break above 1370 on the S&P would result in significant reduction of my Bearish positions, as this raises the possibility of a bounce to the 1390 area and beyond.

Related Headlines:
Fed Saw Need for Low Rates `For a Time,' Minutes Say (Update2)
Oil Rises Above $101 to Record on Increased Demand, Inflation
U.S. Economy: Housing Slump Fails to Quell Inflation (Update2)


Anonymous said...

Lol. Yeah, the bulltards had helicopters in their eyes. Some semblance of reality hit today, though I find it a little annoying that the SP500 closes at ~1340 (in reference to a previous post of yours). It's clearly going lower and finally (macro) reality is slowly creeping in.

As always, simply stellar posts FN. Mucho thanks!

Ben Bittrolff said...

V, macro reality really is SLOWLY creeping in. 1340 is nothing yet. 1250 just STARTS the real decline. WHEN people finally do fully catch on, watch the SPECTACULAR crash in commodities. (I'm working on a more in depth post on the topic for the weekend. So I'll explain then.)

eda said...


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