Another gloom & doom day in the market today. One of the pundits on CNBC said that the January slide is “all about the quarter point”. Did the Fed raising rates effectively 1/8 of a point cause the market crash?
Question of the Day, Jan 20
Another gloom & doom day in the market today. One of the pundits on CNBC said that the January slide is “all about the quarter point”. Did the Fed raising rates effectively 1/8 of a point cause the market crash?
The rate hike gave a plausible excuse for people wanting to get out of way overpriced stocks to do so and blame it on something so there is no blame directly on themselves for being in those investments.
The markets are dominated by very wealthy firms that use it as a money transfer system from the Fed to their even wealthier owners, a sort of money laundering as such.
The rate hike was the pigeon landing on the tip of the tree branch which caused the clump of snow to fall which started the avalanche. All the conditions were already there.
If all it took was such a small rate hike to crash the system we really are doomed. John
No, but it gave them a ‘moment of pause’ to consider what lay ahead. He who panics first panics best.
An analogous question would be: Does ceasing to drink cause DTs?
My Brother in Law asked me a similar question: “What is the right thing for the Fed to do?”
There is no right set of policies to fix our economic problems, just like their is no miracle presidential candidate to our political ones.
So, yes, perhaps the rate hike is the catalyst, but certainly not the cause. And if they had not raised rates? The markets may very well have tanked even faster. The whole system is fucked beyond repair and therefore doomed.
If you are not completely out of the rigged casino by now you are:
(a) stupid and deserve to get fleeced
(b) toast
They are ready to crash the plane into the mountain, rate hike or no rate hike. Whatever tool they employ makes little difference.
I think the market is reacting to the fact there is nothing the fed can do to slow down (forget about stop) what they have started.
Exited the eye into the backside of the storm. The backside is developing into a doozy.
I don’t think the rate hike matters much. There is too much debt and too much leverage baked into everything. An argument could be made that the rate hike perhaps made it happen a tad bit sooner, but it was going to happen one way or another.
People keep talking like this is “the big one” and everything is going to crash and burn, but I remain unconvinced. Ive been waiting to see it for so long, Ill probably be the last one who believes its actually happening.
No.
I don’t believe the rate hike had anything to do with it. Talk of the impending rate hike had been going on for months and months prior to it actually happening. In the big picture ¼% is bunny piss especially after years of zero interest, the rate hike was more window dressing than anything based on the pressure Yellen was being put under from the media and the public to just do it already. The whole process was a joke really.
To me it is interesting how the market storyline continues to evolve. Not to many years ago lower oil prices were considered good for the economy and were considered positive for all sectors of business, capital costs were lowered, costs of producing goods and services were lower and etc. everybody benefitted. Today the story line is lower oil prices are bad for the economy and causes great concern in the markets. Lower oil prices are now bad for business. What gives?
This is not so different from the weather storyline. Retailer’s sales suffer due to unseasonably cold weather last year, this year retailer’s sales suffer from unseasonably warm weather. Give me a break. The bottom line all are avoiding talking about is that people don’t have any money to buy their shit regardless of the weather.
The markets are falling because the numbers are not there to support the high prices. Ultimately investing fundamentals always win out. The market can provide a narrative to a company like Tesla and create excitement and urgency so people feel like they need to get in before it is too late for fear they might miss out on the next big thing but ultimately the company makes money or it doesn’t. If it doesn’t the value crashes.
Unfortunately over the past seven years the market has been oversold to level never seen before in history. The money people know this and now they know it is time to cut and run, let the market run it’s course while patiently keeping their money on the sidelines. At some point a year or two from now they will go about the process of jacking the market back up again and start the cycle over.
The whole rigged mess is fucked up and bullshit.
If the Fed hikes, this baby is going down. If the Fed doesn’t hike , this baby is going down. The world economy and financial system are unsustainable. It’s going down. Just a matter of timing.
The Dow is down 550 points right now………slide continues………why don’t they turn on the HFT bots?
B, you know the big guys are shorting.
When a nation lives by the printed money …
I believe that the David Haggith (sp) article recently posted by admin predicted the mess caused by the interest rate increase.
My guess is that even the minuscule interest rate increase causes all that “bad debt” out there to be just that much worse. I don’t think anyone (except Blythe Masters and Jamie Dimon) has any idea just how bad the “bad debt” really is and that uncertainty is causing the market to convulse. The rate increase may have been small but when applied to our $19 Trillion dollar debt, that’s some chunk of change. When applied to the $1 Quadrillion dollars in debt derivatives it’s enough to cause even Godzilla to shit himself. No es bueno!
Pretty much what Peaceout said. I think mark to fantasy is having an effect.