Re: Trade ideas...lets see what we can come up with
well, it's that time again:
time to bet against those are putting their money on a rate cut by Jan 31, 2008. thats 5 months and 3 meetings from not (not counting the one on august 7th)
the implied probabilities are up at near 100% that there will be 1 rate cut between now and then.
as a result, i'd be long (once again) the put option on fed funds futures at 94.75.
i don't think housing is as massive a problem relative to capacity right now, though some economists that i respect disagree (goldman's & lehman's for instance). they feel confident the fed will "change their tune" when new data come out.
but it would take quite a hit to move us into rate cut territory. even downward revised growth of 1.5% or so would still not warrant a cut given the almost 82% capacity level we're at right now. industrial production isn't slowing enough to give the fed the slack it would need to move from an inflation focus to a growth focus.
so long the puts i say!
Barron
|