Rational pattern

Historically the fed has wanted to avoid haphazard moves. For example, there is surely a zero chance they will do anything at the next meeting because they would appear to have made a mistake at the previous one.

If you look back at rate changes, they usually are in some rational pattern. They pick a direction and go that way until they feel they accomplished their goal, then they go into a wait mode looking for signs. That’s where I think we are now and that will probably last through the election because they don’t want to have any impact on the voters.

I also feel that the housing marketing is going to really take a hit, I just read the first article that used the word “collapse” so it’s starting to get some press, and that will really dampen the economy moving forward and so in my scenario, the fed’s next move will be loosening, probably spring-summer 2007.

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