Helicopter Ben About to Shift the Confetti Shredder Into Afterburner
January 11th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
Gold nearly hit $900 today. Thanks, Ben. No, really. Thank you, sir.
I keep thinking, I need to diversify and hold a little USD. Somehow, I don’t seem to be getting around to it… And that has been a good thing, so far.
Remember, the number to watch on the U.S. Dollar Index is 74.50. That is THE support. If that gets taken out, we’ll likely be taking about gold in four digits, to the left of the decimal place, instead of three.
If consumer stocks bounce on the latest Fed confetti shredder action, let’s all work together to draw up a target list of the most succulent pigs to short/buy puts on to profit from a whipsaw back down. My logic is that the rate cuts will cause more inflation, making things more difficult for consumers.
What companies A) thrive on unnecessary consumer spending in the U.S. and B) haven’t tanked yet?
I’ll start the list with AMZN.
Maybe play APPL again on a retry of $200? I recently made money on APPL to the downside, and I’m superstitious about reshorting pigs, as stupid as that sounds.
What are some other ways to profit from this situation? Hint: I like the ones that allow options plays, since I only do this type of gambling with very small amounts of money.
As you know, our main bets are on cash, gold and food.
Via: Bloomberg:
Federal Reserve Board Chairman Ben S. Bernanke said more interest-rate cuts “may well be necessary” after 1 percentage point of reductions since September to buttress economic growth.
“We stand ready to take substantive additional action as needed to support growth and to provide adequate insurance against downside risks,” Bernanke said today in his first speech on the economy since the Fed’s Dec. 11 meeting. Recent figures suggested the outlook for “2008 has worsened and the downside risks to growth have become more pronounced,” he said.
The comments increased speculation that the Federal Open Market Committee will cut its benchmark rate by half a percentage point, to 3.75 percent, this month. Wall Street analysts say the odds of a recession have increased after a report last week showed a jump in unemployment.
“A number of factors, including higher oil prices, lower equity prices, and softening home values, seem likely to weigh on consumer spending” this year, Bernanke said in remarks to the Women in Housing and Finance and Exchequer Club in Washington.
The Fed isn’t forecasting a recession, the Fed chief said in response to a question after the speech. “We are forecasting slow growth, but there are downside risks,” he added. “It is important to take substantive action against those risks.”
Bigger Reduction
“From the tone of the speech, a 50-basis point cut seems likely,” Lawrence Lindsey, a former economic adviser to President George W. Bush and ex-Fed governor, said from New York. Though it’s “unlikely” the U.S. is in recession, Bernanke “is quite right to take precautionary measures right now,” he said.
The dollar extended declines and shorter-dated Treasuries rallied after Bernanke’s remarks, while stocks initially rose before dropping. Yields on two-year Treasuries fell to 2.65 percent at 2:13 p.m. in New York, from 2.72 percent late yesterday. The dollar dropped 0.9 percent to $1.48 per euro.
Heiligen Weimar Republik, Fliedermausmensch!