What will the FED Do Next?

[ShokWaveRider]

Anyone want to speculate what the FED will do at the Next FOMC Meeting? Decrease, Tighten, Pause and by how Much?

I recon they will increase another 0.25 Point, although a lot of pundits seem to thing that an increase of 0.5 is not out of the question. Personally I do not think they would do that because of the ramifications in the stock market.

SWR

 

[Mwsinron]

Need to see this weeks data. But if I would have to guess today, they would pause.

 

[brewer12345]

I'd imagine they will pause, but there is a lot more data coming out this week that will tip the balance either way. If they bump rates here, I think that's it for at least a few months.

 

[wabmester]

The market says there's a 70% chance they'll pause.

 

[cute fuzzy bunny]

He's a member here, why dont we ask him?

 

[IHateCNBC]

Another .25% and lots of tough talk.

The U.S. is starting to crater.  If they pause they will have inflation they can not control due to poor Treasury auction results.

Painted into box.   

 

[brewer12345]

And wait for the housing implosion to really take effect and squash consumer spending...

 

[IHateCNBC]

And wait for the housing implosion to really take effect and squash consumer spending...

Negative savings rate for 16 consecutive months.

Consumer was tapped out long ago.

If we can not sell new treasury debt then the long end of the yield curve will jump to entice foreign central banks to borrow = inflation the Fed can not control.

 

[Mwsinron]

Well at least a housing crash will be interesting.

 

[ShokWaveRider]

Well at least a housing crash will be interesting.

And I think all on this board are ready for the fireworks. Bring it on.

SWR

 

[IHateCNBC]

And I think all on this board are ready for the fireworks. Bring it on.

SWR

I just realized - I sold my house 31 July 2005 and my rental property 1 August 2005.

 

[dmpi]

I'm pretty sure the Fed will Pause here. The Fed needed to make darn sure that housing is finally cooling off. Also at this level the Fed can work the rate either up or down and still have a lot of wiggle room.

 

[IHateCNBC]

I'm pretty sure the Fed will Pause here. The Fed needed to make darn sure that housing is finally cooling off. Also at this level the Fed can work the rate either up or down and still have a lot of wiggle room.

The bad thing is oil is priced in U.S. dollars. If the Fed pauses crude goes over $80 and the long end of the yield curve spikes - really killing the housing market.

 

[Mwsinron]

Maybe its not so bad the housing market takes a hit. All over valued pieces of wood.

 

[IHateCNBC]

8/1/06 U.S. CORE INFLATION RATE MATCHES AN 11-YEAR HIGH   

 

[brewer12345]

Yeah, not exactly the sign the Fed was hoping for. I think the jobs number on friday will have an impact. The tricky bit is that there are a lot of lagged effects of prior rate hikes we haven't fully seen, so it is hard to know exactly when to stop raising for fear of choking off growth.

 

[Andre1969]

I'd like to see housing prices fall low enough that I could buy up the McMansion orchard up the street, tear down all the houses, and restore it to fields like it used to be. I doubt if it'll ever get that low though.

 

[Mwsinron]

Nice to see income is up.

 

[IHateCNBC]

Nice to see income is up.

Another reason the fed can not pause.

 

[Mwsinron]

Another reason the fed can not pause.   

I guess. However it smacks around that theory of oh noes the consumer isnt spending anymore  At least they have the money to do it with.

 

[IHateCNBC]

I guess. However it smacks around that theory of oh noes the consumer isnt spending anymore  At least they have the money to do it with.

Savings rate was -1.5%. Annualized the "consumer" is spending 18% more then they are making.

Can I say the "S" word? Stagflation.

 

[brewer12345]

Savings rate was -1.5%.  Annualized the "consumer" is spending 18% more then they are making.

Can I say the "S" word?  Stagflation.   

Don't worry me none. Inflation indexed bonds, real estate, hard asset producers and owners, commodities, non-US bonds...

 

[ShokWaveRider]

For fun we should have a poll on our speculation as to what they will do next week. See how us amateurs do compared to the pros like Brewer.... I am still for a +.25% and open language for the next meeting.

SWR

 

[dmpi]

Dispite of the somewhat bad reports today I still think the Fed will pause at the next meeting. The last 3 or4 rate increases have not worked fully through the system. Also inflation driven by companies just padding their profits is not such a bad thing.

 

[wabmester]

FWIW, the chance of a pause dropped from 70% to 65% today (according to fed fund futures).