Tomorrow's the day...

The Fed will most likely announce that the intrest rate will
remain at 1%...thus confirming their belief that, although the
economy is suppossedly "rebounding", the job market is poor. They need
to continue to provide the monetary stimulous to get people to
spend, spend, spend...

The question is: what will happen to the dollar with regards to this
decision and what will happen with the economy as the dollar continues
to plunge.

I have a feeling that tomorrow will be the crucial date. The market
will make its final decision and unfortunately, I don't believe that
a rosey picture will be in store.

Brace yourselves, this could get ugly really fast.

Not that Greenspan raised rates to hurt Clinton/Gore and will now hold back raising rates to help Bush - it just looks that way

I am very interested in financial topics. And I wonder if some DUer with some expertise could answer this: at some point, doesn't the Fed have to raise interest rates somewhat to get people (like foreign investors for example)to buy U.S. Treasuries? If the investors don't see enough return from investing here, they could park their money elsewhere. But if they do raise them then people won't spend as much and the housing market could tank. Could the Fed be between a rock and a hard place here?

...and a hard place...exactly...but if the Fed were to raise interest rates now I think it would be interpreted as done out of weakness by the markets. Look for some more crazy DOD spending...soon?

In October the net inflow was 4 billion. That's right, 40 billion net inflow lost. Heard that 38 billion of Octobers number was the Bank of Japan. Anyone know what the November number is? A whole lot less money is coming into the 'lending pool'. That HAS to increase the value of the pool. less money to lend ,that money lendable at a higher rate.

It's amazing the DOW is near 10,000 given all this other information out there, but then again, bubbles are irrational...

Question: Does anyone know when the Nov figure sare released re foreign capital infows? If the November foreign net inflows are less than $10 billion, then what happens? Any takers?


The Fed is probably going to stay put in today's annoucement. My second question? Will the dollar fall even more and the euro rally to 1.30+? I spoted this article today, please note final paragragh...

'Euro breaks through 1.22-dollar barrier in another record' (Dec 9, 2003
http://www.channelnewsasia.com/stories/afp_world_business/view/61101/1/.html

"The dollar's decline could escalate into a meltdown following the Fed meeting if the market perceives there has been no change on prospects for a rate hike, he warned.

Bear Stearns chief currency strategist Steve Barrow said he would not hesitate to push his euro-dollar forecast to 1.40 if the US currency does not rally in the face of tighter Fed policy in the coming days.

The day's decline was sparked by a report from the Bank for International Settlements, which showed aggressive first-half 2003 repatriation of OPEC funds out of dollars. The report fueled existing concerns over financing the huge US current account gap."

***********
Hmmmm, "aggressive" "repatriation of OPEC funds out of dollars"...now what does that tell us about the future...what is OPEC up to?

Well, the Fed and the US econony is in a very bad spot, can't raise the rates due to maxed out consumers, but can't stop the devaluation of the dollar either for the same reasons.

Me thinks interesting times ahead...

Release Date: December 9, 2003



For immediate release

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 1 percent.

The Committee continues to believe that an accommodative stance of monetary policy, coupled with robust underlying growth in productivity, is providing important ongoing support to economic activity. The evidence accumulated over the intermeeting period confirms that output is expanding briskly, and the labor market appears to be improving modestly. Increases in core consumer prices are muted and expected to remain low.

The Committee perceives that the upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal. The probability of an unwelcome fall in inflation has diminished in recent months and now appears almost equal to that of a rise in inflation. However, with inflation quite low and resource use slack, the Committee believes that policy accommodation can be maintained for a considerable period.

Voting for the FOMC monetary policy action were: Alan Greenspan, Chairman; Timothy F. Geithner, Vice Chairman; Ben S. Bernanke; Susan S. Bies; J. Alfred Broaddus, Jr.; Roger W. Ferguson, Jr.; Edward M. Gramlich; Jack Guynn; Donald L. Kohn; Michael H. Moskow; Mark W. Olson; and Robert T. Parry.

http://www.federalreserve.gov/boarddocs/press/monetary/2003/20031209/