Thursday, November 01, 2007
Another Rate Cut
The Fed gave the markets a nice treat yesterday with the another rate cut. The Dow closed the session with a gain of 137.54 points to close at 13,930.01. The SPX tacked on 18.36 points to close at 1,549.38. We have no play on at the minute as we wanted to wait until this announcement was out of the way.
The Fed announced Wednesday afternoon that it had cut the Fed fund target rate by 0.25 percent to 4.5 percent. The Fed also lowered the discount rate by 0.25 percent. This was the move that was expected, although the committee was not unanimous on the decision. The Kansas City Fed president voted to keep rates unchanged. The statement which also accompanied the cut seemed to suggest there would be no more cuts in the future unless the economic news was very bad!
Economic data Wednesday showed mixed results as well. Third quarter GDP rose by 3.9 percent, well above estimates for a gain of 3.2 percent. At the same time, the GDP price index rose just 0.8 percent below estimates for growth of 2.0 percent. The employment cost index for the quarter was a tenth below estimates as well, rising 0.8 percent quarter over quarter. During the past year, the ECI is up 3.3 percent.
With data like this no wonder the Fed are saying they have a tricky job!
Oil prices soared on the session, closing at $94.53 a barrel, a gain of $4.15. Weekly inventory data showed a decline of 3.9 million barrels of oil during the week. At least gasoline and distillates saw gains by 1.3 million and 0.8 million barrels respectively. In the evening session, crude moved above $95 a barrel to another record high. I don't know what will happen when oil gets to $100 a barrel but it won't be pretty!
Finally Google hit over $700 per stock. Google is going to a $1000!! Watch this space.
I'll check out whats out there and see if we can get a play on.
Until next time.
The Fed announced Wednesday afternoon that it had cut the Fed fund target rate by 0.25 percent to 4.5 percent. The Fed also lowered the discount rate by 0.25 percent. This was the move that was expected, although the committee was not unanimous on the decision. The Kansas City Fed president voted to keep rates unchanged. The statement which also accompanied the cut seemed to suggest there would be no more cuts in the future unless the economic news was very bad!
Economic data Wednesday showed mixed results as well. Third quarter GDP rose by 3.9 percent, well above estimates for a gain of 3.2 percent. At the same time, the GDP price index rose just 0.8 percent below estimates for growth of 2.0 percent. The employment cost index for the quarter was a tenth below estimates as well, rising 0.8 percent quarter over quarter. During the past year, the ECI is up 3.3 percent.
With data like this no wonder the Fed are saying they have a tricky job!
Oil prices soared on the session, closing at $94.53 a barrel, a gain of $4.15. Weekly inventory data showed a decline of 3.9 million barrels of oil during the week. At least gasoline and distillates saw gains by 1.3 million and 0.8 million barrels respectively. In the evening session, crude moved above $95 a barrel to another record high. I don't know what will happen when oil gets to $100 a barrel but it won't be pretty!
Finally Google hit over $700 per stock. Google is going to a $1000!! Watch this space.
I'll check out whats out there and see if we can get a play on.
Until next time.
# posted by Paul @ 4:47 AM 
