If rumors were dollars, we'd be the most liquid team on Wall Street today. The latest rumor we've heard, from a credible source at a large investment bank, is that the Federal Reserve may make an emergency rate cut before the weekend. He admits that this is only a credit trading desk talk for now and if anything he himself is a source unfamiliar with the thinking at the Federal Reserve.
The argument for an emergency rate cut begins with the spike of the dollar, which many believe may be a sign that banks and financial firms are scooping up dollars to make up for lost capital cushion due to events such as the Fannie and Freddie bailout. As this rapid movement in currency places further stress on the global financial system it also creates space for a further Fed easing. The Fed may feel that an emergency cut could ease pressure on the stocks of several financial firms and banks that have come under fire today.
As we said, this is still just something that people are talking about at banks and we haven't had any indication from anyone close to the Fed on this. But be assured that it was talked about on credit markets calls this morning.
Posted by Tapecracker , Sep 11, 2008 12:57PM
Is it me?
Posted by bank_teller , Sep 11, 2008 1:01PM
That would be an asinine move by the Fed and would solve nothing. So maybe they will do it.
Posted by guest , Sep 11, 2008 1:02PM
If you listen closely, you can hear the printing presses.
Posted by diablo , Sep 11, 2008 1:03PM
Carney, this is not a new rumor... The rumored timing of the cut might be new.
If it happens the stock market will dive further (IMO). The rate cut gimmick has ran its course.
Posted by guest , Sep 11, 2008 1:06PM
A cut will do absolutely nothing except send the dollar back into the toilet.
We already have enough Euro's in NYC over for cheap shopping. My brain can't handle anymore socks and sandals
Posted by guest , Sep 11, 2008 1:07PM
what number am I?
Posted by guest , Sep 11, 2008 1:07PM
High probability the FED will default on all treasuries.
Posted by guest , Sep 11, 2008 1:08PM
Nah, don't believe in default
Posted by FUNdamental , Sep 11, 2008 1:09PM
needs more lehman
Posted by guest , Sep 11, 2008 1:12PM
what mayo am I?
Posted by guest , Sep 11, 2008 1:15PM
Pizza needs to merge with Imodium AD in order to survive in my stomach.
Posted by guest , Sep 11, 2008 1:16PM
the dollar falls on news that Europe is weakening. gee, I guess we aren't. the dollar belongs in the toilet, along with the gov's statistical manipulation. Positive GDP figures my ass.
Posted by guest , Sep 11, 2008 1:18PM
the only liquidity you'll have is 80-90 proof. now yer just making s"$% up!
Posted by guest , Sep 11, 2008 1:19PM
tell me something - how has bennie's rate cuts spate "helped" the market recover?
-precisely
so yes, i agree with #4 and #5
Posted by Anal_yst , Sep 11, 2008 1:22PM
@ 11
As I choke down a cajun chicken (i think?) sandwich - which almost ended up splattered all over my monitor as I read your comment - I couldn't, obviously, help but agree
Posted by guest , Sep 11, 2008 1:24PM
That will just prolong the problem. Honestly, how is wall street this stupid. You can beat the market because the market is dumb. Read Seth Klarman's book. You can't ignore Risk.
Posted by chad , Sep 11, 2008 1:29PM
@14, are you insinuating that we'd be in the same bucket we are now -or better- if rates had never been cut the past year or so? id imagine Bear, Lehman and a dozen other banks would have been underground a lot sooner otherwise.
Posted by guest , Sep 11, 2008 1:41PM
If rapid asset inflation and loose monetary policy were the road to prosperity, Argentina would be the richest country in the world right now!!
Posted by guest , Sep 11, 2008 2:19PM
I heard this today also. Seems unlikely, but with the dollar near recent highs, there may be less harm in doing so.
Posted by guest , Sep 11, 2008 3:02PM
How on earth is an extra 25 or 50 basis points going to help anything?
I'm guessing it isn't.