Tuesday, December 16, 2008

FOMC Fallout...

So, the Fed basically said they will lower rates to zero and keep them there. They also said they will PRINT. That’s what they mean when they say they will purchase “agency debt.”

The result so far:

-The dollar tanks.

-Gold shot up $10 an ounce in minutes.

-Yields on medium and long term Treasuries and bonds dive.

-Stocks initially went higher (edit - continuing higher).

-The VIX broke the bottom of its triangle, but produced what looks like a bottoming candlestick. I think this warrants watching to make sure it’s not a throwunder.

So, how low can rates go? We just found out. Any bullets left in the gun? Just printing, that’s it. That’s what happens when the math no longer works.

ANYTHING to keep the growth going, no matter that the numbers involved in the math are overwhelmingly large!

What’s their next move?

I am increasing my holdings in gold and just went short the long bond, but will use tight stops… How much lower can rates go?

Pssst... they can't!

I hate to throw a wet blanket on everyone's party, but this is terrible news and terrible actions for America's future. This is the exact type of action that put us in this position to begin with.