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Let's look at the possibility that Fed does not cut rate on the 18/9. US needs to ride the storm for the Sub Prime mess. The financial institutions and banks need to clean up its act. Then the financial markets will be sent into a turmoil. World market collapses. World growth will be curbed. Bad/

If fed cuts rate, US dollar drops, inflation goes up, economy goes into recession. Impact to the rest of the world. World growth slows down. Bad also.

Whichever way it goes, it does not look good.

 

Currently,we are not sure whether fed will cut rate...so come 18/9 if they does then we will observe the performance of the $...at the same time invest in the market cause rate cute will initially create a bouyant market...so trade as you go and keep the $ under close observance any further down from 80 level sell all,,,,,,,,good luck,

 

US stocks rebounded last Friday on positive macro news: better-thanexpected July homes sales and durable goods orders suggesting that the US economy is not about to slip into a recession. However given that the sub primes worries really only hit global financial markets in late July/August, the impact on the US real sector may only be seen with the release of macro data from August onwards. This week we are going to get several developments that may give investors the chance to gauge the state of the US economy.

On the macro data calendar, On Monday, we get July resale home data for July. The following day, the Fed will release the minutes from its Aug. 7 policy-setting meeting. All eyes will also be on a couple of consumer sentiment gauges the business-biased Conference Board consumer August confidence index (Tuesday) and the (Friday). Ihouseholdbiased University of Michigan confidence index t may be too early to tell if private consumption took a severe knock in July, but it is still useful too see the July data for personal income and consumption (Friday). Together with the income and spending data, we get the core consumer inflation (a closely watched Fed gauge of underlying inflation in the US). We also have the revised 2Q07 GDP report on Thursday ? likely to be revised up from the previous 3.4% estimate. But this is historical and may have little bearing on economy activities in 2H07.

And finally on Friday, everyone may get a chance to hear what the Fed Chairman Ben Bernanke has to say about the current state of the US housing state as well as the impact of the sub prime jitters on the real economy because the Fed Chairman is giving a speech about "Housing, Housing Finance and Monetary Policy".

So if the macro news flow is still supportive of modest economy growth rather than recession and that we do not get new nasty news from the credit market, it could be another positive week for equities although trading in the US may be lighter towards the tail end of the second half given that it will be a long weekend for Americans because of Labour Day (the first Monday of September).

 

Fund rate cut is short term cure...america is very heavily indebt...there is no way out but to bite the bullet...and take a lower living standard...and of course the world will have to go into recession...for market to balance itsself out...

Actually...interest rate should be base on market force rather than  manipulated by a few ppl in the fed...than we would not have this mess on and off..rate should be left to market force without interference..that is the best ..SUPPLY AND DEMAND...

Paper monEy without backing is subject to manipulation as well..ever wonder where your new note for CNY come from...u want how many...MAS can print for u...but so long there is growth is fine...but what happen if there is no growth or worst negative growth...than the money in circulation will chase after less service and good...this will cause high inflation...you are naive to believe that inflation is 2 to 3 %....this is what they say and want u to believe,,,but u go around and check it out,,it is?

 

yammay74...rate cut is not necessary good..if rate is low those bond and treasury bill will not be attractive..ppl will bail out and sell the dollars..this will weaken the $..

Who would want to buy cheap $..when it is getting cheaper day by day..see chart for US$ index..iniatially ..yes..cheap rate convert to easy money for the market at first,but weak dollar will cause inflation to rise in the long run,,,imported good will be expensive for corprate america..in other word they will buy less...bad for us,,,we cannot sell more to them,...remember america economy is 2/3 comsumption...they depend very much on consumer..less consumption equal less growth....bad for stock also..

Inflation is fed biggest obstacle,otherwise Bernanke would have reduce fund rate long time ago..anyway the next crises will be serious...look at the dollar to be scare...on the 24/7 it actually go below 80...for half an hour...then go back up...but i wondwer how long it will stay abv thuis level...historically...the index have onli touch this level for 4 times for the pass 40 years if i can remember...check out yourself...even at this level...some expert still say the $ is some 30% over value...the printing of M3 is out of control...

Look at China...money supply 20% over,but real growth is 10%..what happen....pork px is very high...even instant noodle is 30% to 40% high..this is high inflation...this another bubble here waiting to burst...STI will dive if this SSE crash....too many cheap money chasing too few goods....that y i suggest to ppl to buy a little gold for insurance..

 

Rate cut may lead to higher inflation, which may in turn lead to recession, which may lead to weaken dollar.

But this is a very big and surface picture. Many catalysts have to be added for them to take place.

 

Look out for consumer confident stat tonight.

It is likely to bring DJ further south.

 

hi Cheong wee,

Why does a fed rate cut lead to weakening of USD? Pls enlighten.

I tot when rate is cheaper, others will borrow more USD and lead to higher demand for USD and so the USD should strengthen. Pls enlighten.

 

U.S. stocks slipped while safe-haven Treasury bonds gained as signs of deepening trouble in the housing market soured the outlook for corporate profits and the economy. The dollar rose against the euro, but fell against the yen as investors attempted to minimize exposure to risky assets amid lingering fears of a global credit crisis. The Dow Jones industrial average was down 56.74 points, or 0.42 percent, at 13,322.13. The Standard & Poor's 500 Index was down 12.58 points, or 0.85 percent, at 1,466.79. The Nasdaq Composite Index was down 15.44 points, or 0.60 percent, at 2,561.25.

 

A rate cut is amount to financial suicide...the dollar is already at historical low...if fed cut fund rate...the dollar will weaken further..foreigner will sell us T-bill and bond...this will cause long term interest rate to rise...and at the same time a weak $ will cause import good to rise...that is inflation...if imported good is expensive..america will consume less...in turn bad for us...we cannot sell to them..

There is the saying the darkest hour is always just right before the dawn...trade along but be careful...fear the worst come end sept and oct...good luck..i hope i am wrong..During Alan time it was different..he can easily increase and reduce rate as he want,but right now the FED dont have that luxury to do this...reduce the dollar tank...increase the housing burst..so i think the fed will still hold the rate ...at least.they still can hope for somehow a soft landing...which i think will no happen..

What my conclusion is we will have a recession soon..3 to 6 mths fr now...like Marc Faber predicted

 

 

BOTTOMLINE: supply abubdant, prices down plus lower interest rate = more sales, rate cut is almost certain...mom/yoy not relevant at this point in time. Anyway it's good 4 ppl who buy in market down n also in market up. any news from bbc?

 

Unless you know what Ben is doing, don't bet on it.  :)

For homes/housing, there are a couple of reports each month which have different relevance to the market.

1. US Existing Home Sales

2. US New Home Sales

3. Housing Starts

4. Building Permits

Not all reports will affect the interest rate decision.  Today's one typically look at the JUL's inventory numbers of unsold properties.  Then again there is also a MoM (Month on Month) report as well.

 

 

 

great. fed most likely cut rate on 18 sept, supply of houses increase, prices down...an excellent recipe 4 housing glut 2 end fast .... the light of tunnel (to subprime loans) is now visible. Good news, in my opinion. 

 

US analysts expect August's home sales data (to be reported next month) to be WORSE due to the credit crunch this month .... Expect recession in US soon just like Greenspan predicted in February?

The coming Fed rate cut won't help much to boost the market cos it's too little and too late. Hold your buying till November. (Just my opinion lah)

 

From CNN -


Existing home-sales fell 0.2% in July, slightly less than forecasts, but the glut of homes on the market increased.

 

US Existing Home Sales (July) Down 0.2% to 5.75 Mln.

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Definition

Records sales of previously owned homes in the United States . This report provides a fairly accurate assessment of housing market conditions, and because of the sensitivity of the housing market to business cycle twists, it can be an important indicator of overall conditions at times when housing is particularly important to the economy.

While used home sales are not counted in GDP, they do affect the United States economy. Sellers of used homes often use capital gains from property sales on consumption that stimulate the economy. Higher levels of consumer spending may also increase inflationary pressures, even as they help grow the economy. The existing home sales report is not as timely as other housing indicators like New Home Sales or Building Permits. By the time the Existing Home Sales are recorded, market conditions may have changed.

The headline is the total value of properties sold.

 

Let's see how both charts perform after 2200hrs .... :P

 

          

       DOW                                      NASDAQ

 

Rock and Roll ?!?

 

US market trading lower now. Existing home sales data to be out in 20 minutes time ..... Rock or Roll?!!

 

Likely to trade flat as investors are waiting for existing home sales data. If data shows strong growth then things should be good. But if marginal gain or worst in -ve zone, then prepare to see red...