As a gold bull, I have always bet on [government reflationary intervention]. If the S&P lock limits down tomorrow, the panic will be pretty extreme, and gold will blast through 1,000 before the quarter’s end.
Well, I timed that one well, didn’t I.
Release Date: January 22, 2008
For immediate release
The Federal Open Market Committee has decided to lower its target for the federal funds rate 75 basis points to 3-1/2 percent.
The Committee took this action in view of a weakening of the economic outlook and increasing downside risks to growth. While strains in short-term funding markets have eased somewhat, broader financial market conditions have continued to deteriorate and credit has tightened further for some businesses and households. Moreover, incoming information indicates a deepening of the housing contraction as well as some softening in labor markets.
The Committee expects inflation to moderate in coming quarters,
but it will be necessary to continue to monitor inflation developments carefully.
As one longtime bond trader said:
At the risk of being crude, today’s move amid a melt confirms that Bernanke is officially the market’s b!tch.
Notably, the Fed’s announcement barely budged US equity futures. The S&P is still primed to open down 4.3 percent. The Fed has squandered its ammunition.
The Fed is going to have to overtly print credit in order to save the monolines; that’s the bottom line.