https://risksandreturns.com/category/federal-reserve/ In search of asymmetric trading opportunities… en-US https://risksandreturns.com/2015/07/30/a-market-correction-is-up-to-the-fed/ https://risksandreturns.com/2015/07/30/a-market-correction-is-up-to-the-fed/ Thu, 30 Jul 2015 13:51:27 +0000 Since I turned cautious on stocks in early May, the market has been treading water with minimal volatility. If the year ended today, the S&P 500’s intra-year decline of 4% would be the 2nd smallest in 35 years. https://risksandreturns.com/2008/12/15/deflation-making-sure-it-doesnt-happen-here-by-ben-bernanke/ https://risksandreturns.com/2008/12/15/deflation-making-sure-it-doesnt-happen-here-by-ben-bernanke/ Mon, 15 Dec 2008 20:45:46 +0000 Like gold, U.S. dollars have value only to the extent that they are strictly limited in supply. But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper-money syste https://risksandreturns.com/2008/11/03/buying-november-09-fed-funds-futures/ https://risksandreturns.com/2008/11/03/buying-november-09-fed-funds-futures/ Mon, 03 Nov 2008 21:19:57 +0000 Last Friday I purchased fed funds futures contracts for November 2009 at 98.25. I went long fed funds futures earlier this year and closed the position in September with a huge gain. In retrospect, I could have made even more if I held on to the position, but I didn’t anticipate the Federal Reserve slashing the overnight rate by 100 basis points in October. https://risksandreturns.com/2008/06/24/buying-fed-funds-futures/ https://risksandreturns.com/2008/06/24/buying-fed-funds-futures/ Tue, 24 Jun 2008 22:00:31 +0000 Today I purchased the 30 day federal funds futures contract for February trading on the Chicago Board of Trade for 97.17 meaning that I do not believe that the Federal Reserve will increase the fed funds rate above 2.83% by February. The market has priced in a hike of at least 83 basis points within the next 8 months due to Bernanke’s and other committee members’ recent speeches expressing concern for the weakening dollar and rising inflation. The fear is that the Fed will follow up its hawkish talk with aggressive monetary tightening. https://risksandreturns.com/2007/12/12/dont-worry-mr-market-more-rate-cuts-are-on-the-way/ https://risksandreturns.com/2007/12/12/dont-worry-mr-market-more-rate-cuts-are-on-the-way/ Wed, 12 Dec 2007 10:50:31 +0000 As expected the Fed reduced by 25 basis points the funds rate to 4.25% and the discount rate to 4.75%. The stock market tumbled immediately after the announcement because there was hope that the discount rate would be cut by 50 basis points. Moreover, investors seemed to be concerned that the FOMC statement didn’t signal additional future rate cuts. https://risksandreturns.com/2007/09/19/the-fed-yields-to-wall-street/ https://risksandreturns.com/2007/09/19/the-fed-yields-to-wall-street/ Wed, 19 Sep 2007 13:16:26 +0000 With yesterday’s announcement of a 50 basis points cut to the federal funds rate, the Fed has officially shifted their expansionary monetary policies to high gear. Their previous move was a hike to 5.25% on June 29th of last year. A month later, when the market was debating whether the next Fed action would be a cut or hike, I stuck my neck out and guessed that an interest rate reduction would be more likely given the drag that the troubled real estate sector would exert on the rest of the economy. https://risksandreturns.com/2007/03/22/can-the-fed-save-housing/ https://risksandreturns.com/2007/03/22/can-the-fed-save-housing/ Thu, 22 Mar 2007 21:31:35 +0000 Yesterday the market got a lift from the FOMC statement which was interpreted to indicate that the Fed no longer held a tightening bias, setting the stage for a possible rate cut later this year. The expectation is that Fed easing will help the troubled housing sector by making it easier for people who are struggling to meet their mortgage payments to refinance at lower interest rates. https://risksandreturns.com/2006/08/21/the-fed-cant-save-the-economy/ https://risksandreturns.com/2006/08/21/the-fed-cant-save-the-economy/ Mon, 21 Aug 2006 20:59:58 +0000 An excerpt of a column from today’s WSJ, Not Too Fast, Not Too Slow caught my attention: https://risksandreturns.com/2006/08/10/next-fed-move-will-be-a-cut/ https://risksandreturns.com/2006/08/10/next-fed-move-will-be-a-cut/ Thu, 10 Aug 2006 21:07:13 +0000 My belief is the Fed has ended its current rate hike campaign and will begin cutting rates sometime this year or early next year. James B. Stewart of SmartMoney.com points out that history supports my belief: