Via Business News Network
Previous post of Paul Van Eden's Analysis

Since 1985
5 Years
1 yearSource: St. Louis Fed

Also look @ previous post on this issue on Aug 29, '08

Current Fed Fund Rate: 2.00%

Fed Fund Target Rate 1 year
Fed Fund Target Rate 5 months
Source: St. Louis Fed

Via Bloomberg.....

Source:
http://www.nytimes.com/imagepages/2008/09/28/weekinreview/20080928_MARSH_GRFK.html

After pumping $200 billion by central banks around the globe + Fed's bailing out role of AIG, MER-BOA, GS, JP Morgan things, market should calm down at least for a while. I am expecting new buyers to kick in & SPX should go back up near 1300 until next big news comes out.

Crude oil is down & there is temporary enough liquidity in market. Fed & other central banks are really committed to continue their Term Auction Facility program to pump up money. So, I am not seeing any other reasons right now for SPX, not to go back 1300 in coming months.
That means, USD/JPY back to previous key level of 108-109.

EUR/USD should remain in pressure due to ECB's dovishness towards interest rate. Check previous post on currency analysis for detail fundamental view.

I'll be watching Gold really carefully becase in India key festival season (Diwali) of the year is coming next month. India is the largest consumer of Gold. If consumer demand increases for gold for the season more than expected than surely there'll temporary rise on AUD & EUR, but rise would be really limited.

So, let's keep watching volume & open interest and make some money.

Happy trading.

Source: NY Times

Source: wsj
FOMC September 16th, 2008 vs. August 5th, 2008

more....

Read more on Bloomberg

Ben Bernanke in 2002 on Money Supply
"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 system, a determined government can always generate higher spending and hence positive inflation. "

On July 13, 2008
"The Board of Governors of the Federal Reserve System announced Sunday that it has granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary. Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities. This authorization is intended to supplement the Treasury's existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets."
FRB Press Release

From Marketwatch,
"At the moment, each company may borrow only $2.25 billion."

"But the agencies have grown to mammoth size. They own or guarantee $5.2 trillion of U.S. home mortgages. "

"Peter Schiff, president of Euro Pacific Capital, predicted that the package would put downside pressure on the dollar. He said letting the two firms collapse was preferable to a bailout and said the package announced amounted to sticking a finger into a leaking dam that was going to burst one way or another."

Jim Roger on Fannie & Freddie


LET'S GO IN PAST FOR A MOMENT & HEAR FROM x FED RESERVE CHAIRMAN GREENSPAN that "Excess money causes inflation."



He appeared on Daily Show in October of last year, but still it's worth looking @ how Fed is screwing up things. These are the points Greenspan is making.
1) Excess money causes inflation.
2) Fed easy credit favors stock market operators at the expense of savers.
3) The Fed believes that the market trades more on perception of what the Fed is or will do instead of the actual policies.
4) The Fed must make the market perceive that the system is sound.
5) The presence of the Fed guarantees there is no ‘free market’.
6) He still can’t forecast the economy or whether there is a bubble or too much exuberance.
- Source BigPicture

Source: WSJ