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jsl

Pre-Fed hang-up

Other than some unlikely surprise from the Fed, the market pretty much put the Fed factor aside. We have learned that the borrowing cost remains high despite the aggressive rate cut, so it wouldn’t be a big deal if another 25bps is cut or not. The banks continue to be in need of help, the Fed will for sure provide that by rolling over all the facilities. The Fed has done what need to be done. Any other measure will be slow, indirect and not guaranteed to work desirablely. The market is just hanging up there to wait for this to be finished and move ahead in either direction with any excuse.

 

Yield curve

As explained above, the drop of yield curve reflects the view of the Fed irrelevance. The Fed is already at its full throttle, even if there are more cuts on the way, the real (lending) power is clearly dry. So the bonds market is focusing more on the risk rather than any future rate changes. BTW, inflation risk is one of the many.

 

Inflation

I do believe the media and the main street focus will shift again back to inflation. But I don’t think it automatically means negative, well, maybe negative for short term. The anxiety that it creates will probably push up VIX. Before the credit problem becoming a world wide crisis, the U.S. has successfully exported inflation all over the world. It is not much demand driven, but a panic effect.

 

Oil

A sudden oil jump may not have much long term effect, but for a short term, traders will put their feet on the brake for any further short. This week’s inventory report will be key to the future development.

 

Carry trade

I don’t think carry trade can come back so quickly, at least not on a large scale. Though I can’t give a convincing argument, other than technical ones, about why the stock market swing up recently, I feel that the unknown reason is behind both the stronger dollar and the rebound of the stocks. After all, both the market and the dollar were short term oversold. Correlation not causality, I say.

Add a couple more lines here. The carry trade I am takling about here is "using Yen to buy US stocks". The main currency carry trade always exists to certain degree.

 

[ 本帖最后由 jsl 于 2008-4-28 00:04 编辑 ]

Cobra

Thanks, JSL. I really appreciate your comments. 先顶到天上再说。:(13):

LDK

Fed on tap

The central bank is widely expected to cut its key rate by a quarter-percentage point to 2% on Wednesday. It's also increasingly expected to signal in its statement that it will pause, at least for now.

Given improved sentiment in financial markets, central bankers are now believed to have grown more concerned about a surge of inflation in energy, food and commodity prices.

Expectations of lower rates have put heavy pressure on the dollar since last summer, but the greenback appears to have stabilized somewhat recently, along with expectations that the Fed's job is done.

Yet the market's reaction to the "one-and-done" scenario might well depend on both the estimate of first-quarter gross domestic production and the April employment report.

"If the advance GDP comes in as a positive number, then the market will be wiling to accept it," said Mendelsohn of Windham's Financial. "If not, they won't. It's the same for the employment numbers."

Economists surveyed by MarketWatch expect no growth for the first quarter. Meanwhile, the economy is expected to have shed another 85,000 jobs in April.

Nick Godt is a MarketWatch reporter based in New York. [ 本帖最后由 LDK 于 2008-4-28 00:24 编辑 ]

还在发呆

没时间多写，贴几张图来顶。Barron's big money survey.

 

 

xiaobailong

分析了这么多，结论是谨慎看牛，对吗?

xssl

原帖由 Cobra 于 2008-4-27 23:56 发表 Thanks, JSL. I really appreciate your comments. 先顶到天上再说。:(13):

同顶！同顶！