Media Appearance: CNBC's Morning Call (3/18/08)
This morning, I'll be debating about the upcoming Fed cuts on CNBC's Morning Call at 11:20am.
My arguments are quite simple: Since the Fed cut the discount rate on August 17, 2007, here is what has occurred:
- The CRB index is up 32%;
- The US $ Dollar index is down 13%;
- S&P500 is off more than 10%;
- Fed Fund Futures are now pricing in 100% chance of a 100bps cut;
- Generated high level chatter of a coordinated global, multi-national, currency intervention;
What the Fed is accomplishing by cutting rates is stimulating inflation, debasing the dollar, punishing savers, and making travel abroad exorbitantly expensive for all but the wealthiest Americans.
I believe that the FOMC should "man up," show some backbone -- cut rates by "only" 50 bps. They might find out what its like not to be at the Market's beck and call (girl). That should stabilize the greenback, and perhaps send food and energy prices lower (earning Ben the appreciation of consumers through out the country).
A little restraint would go a long way . . .
~~~
UPDATE: March 18, 2008 11:57 am
click for video
To Cut or Not to Cut?
Wall Street expects a big rate cut, with Barry Ritholtz, Fusion IQ; Carl Weinberg, High Frequency Economics and CNBC's Trish Regan
Tuesday, March 18, 2008 | 11:01 AM | Permalink
| Comments (51)
| TrackBack (0)
add to de.li.cious | 
digg this! | 
add to technorati | 
email this post
TrackBack
TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00d8341c52a953ef00e55131fa5b8833
Listed below are links to weblogs that reference Media Appearance: CNBC's Morning Call (3/18/08):
Comments
What is the probability of that Barry? Zero?
-- r
Posted by: DesiPanchi | Mar 18, 2008 11:04:05 AM
I submit that the Fed does not exist "for the appreciation of consumers" in the US, but instead for the "appreciation of bankers" on Wall Street.
Posted by: Mr. Obvious | Mar 18, 2008 11:09:18 AM
I wouldn't bet real money on it (say, no more than Bear Stearns' current share price), but I would wager it will be smaller than 1%. Partly, just because the market is so positive in the outcome.
Posted by: Bob_in_MA | Mar 18, 2008 11:10:15 AM
You couldn't write a better script than today......
interest rate cut combined with GS "earnings"
people are stupid if they think that writing up values of bonds while writing down values of "bad loans" is a strategy to accumulate wealth...
I guess it is today though....
and let's just continue to add to level 3 assets while we are at it.
No one seems to read anymore.
sickening that this market has been hijacked by this administration and no one seems to do a thing about it. Of course all under the guise of free markets.....only if the direction is up.
LEH's and GS's numbers are such a farce.
Ciao
MS
Posted by: michael schumacher | Mar 18, 2008 11:14:55 AM
I've been saying the last week (ever since I saw a Fed board member give an interview saying the market shouldn't expect a large cut because they were going to address the liquidity issue through other, more creative venues) that we'll only be getting 50 bps.
I told my dad this and he said "But the market will crash if they do that."
And my reply was, "Yes, that is fake money. Real money is the bondholders, and if they get mad (either through the debasement of currency or inflation) then the actual foundations of the financial system are screwed."
They aren't that stupid are they?
Posted by: mikkel | Mar 18, 2008 11:17:09 AM
It makes no difference long term whether they cut 50bps or 150bps. The dollar is toast.
Personally I would LOVE to see a decline in certain commodities. I will the back up cinefoz's boat and load up.
Posted by: Ross | Mar 18, 2008 11:20:11 AM
One thing I guarantee you that the Fed, Congress, and 97.5% of Americans DO NOT care about is how much it costs you to go have an espresso in Rome.
The other signs of inflation though should concern them (and us, but hey, I'm up to 20% gold).
Posted by: David | Mar 18, 2008 11:27:09 AM
Never happen, that Fed could care less about inflation, or the box of corn flakes
Posted by: Harry | Mar 18, 2008 11:29:39 AM
Trashing the value of the dollar punishes savers. Do we have any savers left in america?
Posted by: flash91 | Mar 18, 2008 11:31:17 AM
The 6 dollar/gallon gas and 7 dollar/gallon milk, the message is simple and absolutely clear! Well said, Barry
Posted by: Ben | Mar 18, 2008 11:32:57 AM
fucking ridiculous.......
ciao
MS
Posted by: michael schumacher | Mar 18, 2008 11:39:47 AM
You know what they say in this adminstration, "anyone can go to Bagdhad, real men go to Tehran".
And, "Anyone can cut 50bps, real men would cut 125"
I think our real men will settle for 100 today. They told you last week that there was no inflation in Feb. (insert whatever that stupid booyah think cramer says here!)
Posted by: 12th Percentile | Mar 18, 2008 11:47:06 AM
Fed SOP: don't stop until you go too far.
Posted by: TempusFugit | Mar 18, 2008 11:47:43 AM
These guys only have a few months left in which to finish looting the treasury. The more wracked the system, the easier it will be.
Posted by: Marcus Aurelius | Mar 18, 2008 11:55:56 AM
Positive conf calls from both LEH and GS this morning. The FOMC implicit credit line really does change the game for these firms. They successfully scared the FOMC into giving them the holy grail.
Both talking about using the cheap Fed borrowings to "grow the biz" which means the balance sheet.
Posted by: Vermont Trader | Mar 18, 2008 12:04:14 PM
Ummm... why is BSC trading at $7 (+45%)right now?
Posted by: Paul in NYC | Mar 18, 2008 12:08:27 PM
vermont-
how is that any different than where the TAF monies went????
That the spreads kept increasing while the Fed was "providing liquidity" tells me that is what they have been doing all along.
They have been doing this for more than 6 months.
Ciao
MS
Posted by: michael schumacher | Mar 18, 2008 12:09:35 PM
oops... make that 8 (+65%)!
Posted by: Paul in NYC | Mar 18, 2008 12:13:32 PM
Flash 91
Yes we have savers. They are called pension funds, insurance companies, etc. that must align investments with liabilities and are one cause for this mess, as they reached for yield. Public pension funds are woefully underfunded and they cannot earn asnything on their assets unless they get into "speculative" areas. This bomb will burst in a few years and you will hear a chorus of "whowouldathunk".
Posted by: larster | Mar 18, 2008 12:17:02 PM
Barry it's too bad most people you debate on their are either idiots or can't back up the reasons they disagree with you with good numbers.
To that idiot who said the dollar going down is good because it increases imports, you should have reponded by asking how much the increase in imports has been offset by the increase in commodities prices etc. Would have been great if you actually knew the numbers to that too. (I don't either)
Posted by: Owner Earnings | Mar 18, 2008 12:19:45 PM
While we're dreaming,the Fed should really throw the bitch off its back and increase rates by about 125 bp.
Then the stock market could find a bottom. Housing could find a bottom. The dollar could find a bottom, etc. and so we'd get the pain, but quickly, and then it'd go away, clearing the path for growth.
Instead, they'll probably go 100 down, and like death by a 1,000 cuts, the dollar will continue it's inexorable slide to oblivion, until the fed really really has to jack up rates to get control of hyperinflation, or alternatively, the fed itself goes belly up, and we get the fourth United States Bank.
Come to think of it, it's a good thing we've still got nukes. That may be the only thing that will save us.
Posted by: Donkei | Mar 18, 2008 12:21:02 PM
Well I watched the video and what I learned is that our evil laws are preventing the Fed from buying all the bad debt and saving us.
Stupid laws.
Posted by: mikkel | Mar 18, 2008 12:24:35 PM
spreads will probably continue to increase although I personally believe that we have put in a near term bottom.
Sure these firms may all turn into zombies a la Japan but it won't be for lack of funding and it won't happen overnight
I still think most financial firms will need to raise at least one more round of capital. So this maybe an orchastrated pump ahead of those capital raises to boost investor confidence.
Posted by: Vermont Trader | Mar 18, 2008 12:37:27 PM
Maybe the FED is trying to annihilate China. They peg to the dollar, and they already have 7% inflation and ~5% interest rates, imagine if the dollar keeps goin' down. It's cold war!
Posted by: Bucket | Mar 18, 2008 12:38:41 PM
BTW Nice hair piece on the bottom of the video capture ???
Did it speak up too???
Ciao
MS
Posted by: michael schumacher | Mar 18, 2008 12:38:49 PM
