The FED wants you to believe that they have the power to determine US interest
rates. But reality is they don't have the power to decide. It is the market that
decide. To say that the FED has the power means that they are bigger than the
market. This too is impossible.

So give what they cliam on their website here a big pinch of salt.

Even when cantral banks come together to intevene in the FX market, many
people believe that that can be done. But they don't realize that even the
combined effect of the worlds biggest central banks cannot change the direction of
the the FX market. What they can do is just to create a reaction that so often form
out on the chart as correction. That's all they can do. This so often provide the
ammo for the market to whack even harder negating all that the concerted
intervention had done. But will they ever learn? NO!. They always like to believe
they are bigger than the market. Nothing can ever change the fact that the market
is King even when it comes to currencies. But, alas even people I know and in the
FX market for a long time still cling to this wrong belief. I was even chided for my
views.

The FOMC meets again today. As usual the market has already decided sometime
back what the FOMC has to rubber-stamp today. The market has already raised
the Fed Funds to 3.5 pct - see chart for Fed Funds Aug2005. The market has also
decided what the Fed Funds will be in Sep and Oct - see charts. You will also see
the FED rubber-stamps the new rates in future meetings.

Or-oh, just realise from the Fed Funds charts that the last 3rd-party DLL I am
using is givng a rounding errors:

96.536 (vs 96.535)
96.386 (vs 96.385)
96.231 (vs 96.230)

Looks like I have to drop this MetaLib DLL as well and use my own Compu-Trac
file routines. Might as well. I paid for a commercial license few years ago and
have discovered bugs some of which is still not fixed. They have stopped
answering my questions.

Add-on edit:
I took out the MetaLib "Reader.iRound = 3" line and the raw price is read correctly.
This line I added I think in the last 2 days because I though the bug was fixed
some time back but now obvious it wasn't.

As expected, the FED rubber-stamped the decision by the market to raise the Fed
Funds rate to 3.5 pct in their FOMC meeting.

The economists and fundamentalists and the media will want you to believe that
by reading between the lines of the FED's announcement that they can tell you
what the FED might do in the future. Well, they can try to sound sophisticated and
intelligent if they want but you have just seen how silly this type of talk is. If you
want to know what the FED is going to do, just look at the decisions already made
by the market and reflected in market prices.

Right now the market has decided that Fed Funds to be 3.75 pct latest by Oct and
4 pct by Nov.

The market is doing some rethinking for the FED to rubber stamp. The charts show
the market decision making proccess and it is never a secret and the FED must
follow whatever decision they make.

So far the decision proccess seems to suggest that Fed Funds may no longer reach
4 pct in Nov. It is too early to tell whether it would be 4 pct in Dec.

Nearer in Oct, which is next month, the market is also reviewing their earlier
decision of 3.75 pct. Should they so decide that FFV2005 trades at/around 96.4
then 3.5 pct stays.

The market appears to be reversing their decisions and now decide that the FED
should rubber stamp an increase in the Fed Fund rates to 3.75 pct when they meet
this coming Tuesday. And further down the road, to 4 pct in Nov. These are the
market's earlier decisions before Hurricane Katrina came.

As you can see now repeated again that it is the market that decides, not the FED.
And so since the market has decided that Fed Funds to be at 3.75 pct so the FED
had rubber-stamped that decision several hours ago.

Now on to Nov and the market is already deciding on 4 pct.

The market does not decide, the FED hinted. ECB hinted too. Only BOJ is hard to figure out, can the market decide or does the market know ?

The market does decide where interest rates should be, long before the Fed.

Long before the Fed meet, the market has already decided that Fed Funds to be
4.25 pct. Even longer before the Fed meet, even before their previous meet, the
market has already decided that the Fed Fund in Dec will be higher that 4 pct.

The market decides and the Fed must rubber stamp. The Fed can hint whatever
they want with their wordings. The economists and journalists, whoses jobs are to
try to show their audience they are writing something "smart" so that they will
continued to be read and sell their products/services, will tell all sorts of things
they can get from their "illusions".

The proof that the market has decided on 4.25 pct long ago:




What is the market's decision for Fed Funds in Feb 2006?

If you have followed the newswires and newspapers the last two days, you would
have been bombarded by news reports of Fed's minute and views of journalists
and economists. There were much interpretation.

No doubt the FX market reacted very emotionally for this is normal because that
market is full of "sheeps" that wanted to be led by any leader. And that is the
market where you constantly hear people asking,"What do you think of the
Dollar?", What do you think of the Euro?". What do you think of the Yen?" and so
on.

And so it is like this that prices reacted sharply. No difference in the stock market.
Well basically no difference in any market.

But the decision makers they don't waver. They know all the craps that you will
read. They will not be affected for it is they who decide. It is they that the Fed has
to follow. They have decided back in Nov that Fed Fund to be 4.5 pct next month.
The decision was made 3 months before the Fed would rubber stamp it. So don't
be surprised.

And then may be 4.75 in Aug2006 but too early at this time to check their
decision. Maybe we check it in May 2006?

http://www.federalreserve.gov/boarddocs/pr...131/default.htm

When you return to the market after the long CNY holidays, don't be surprised
the Fed's rubber stamping the market's 3-months old decision to raise the Fed
Fund rates to 4.50 pct. Not too long ago, only 2 to 3 hours ago that the rubber
went on the ink and then on to the paper.

Once again, you see that it is the market that makes the decision, not the Fed.
No body is bigger than the market. Not even concerted central banks intervention
can change the directional trend of currencies. Yet senior people in the banks
used to scoff at this type of proof.

Somehow economic education in university and those world class economic
schools is not good. Well, at least it is good for the market for it provide a stream
of people to the wrong side of the market. But economists are learning lately.
They are learning from the technical analysts and now follow the CBOT Fed Fund
futures for their analysis.

The market now says Fed Fund to be 4.75 pct in April, quite definite May 2006.
Let's witness the Fed rubber stamp again.

Nearly 4 months ago, the market has already began making its decision for Fed
Funds to be at 4.75% in April 2006, becoming very affirmative 2 months ago.
Tonight the Fed will once again go through the motion of rubber-stamping that
decision.

Where Fed Fund in May, June, July, Aug, Sep, Oct 2006? If you were to read
today's Straits Times Money page H16 article titled "Fed expected to raise US
rates, signal halt to hikes", economists would want you to believe that 4.75%
is the end. No more. But they have learned to look at charts, to look at futures.
Something that is a big no no to them.

You see, it used to be like religion or politics - you are either here or there. But
they have no choice. They have to change. They will still give reasoning, the usual
economists' crap; this is their training in economic schools any way. But they can't
ignore the market. They are learning that the market is king. That futures is not
just speculation but important decisions are made there.

Back to reality! Who decides? The market or the Fed?

Fed's rubber stamp:
http://www.federalreserve.gov/BoardDocs/pr...328/default.htm

Another rubberstamp tonight to 5 pct.
Probably yet another in Aug or Sep to 5.25 pct.

As expected, the market is king. The Fed had to rubber stamp.

http://www.federalreserve.gov/BoardDocs/pr...510/default.htm

Rubber-stamping date is near. Let's see what the market has decided for te FED to do.

1) Rubber stamp a 0.25 hike to 5.25% next week, 28/29 June.
2) Rubber stamp another 0.25 hike to 5.50% on 8 August.

So much talk about nothing by economists the last two months, so much exaggeration,
so much bombardment by the news media the last two months, so much panic the
last two months, when the decision has long been made, when the rubber had to
stamp. And stamp it did.

http://www.federalreserve.gov/boarddocs/pr...629/default.htm

The market is shifting their decision to one of no rate hike next Tuesday, 8 Aug.
Especially if Fed Funds futures continue higher.

Whether to hike, lower or leave unchanged, the FED has to follow the decision
maker. The decision maker is the market.

I have tried in this mini series over the last several months, to show how this part
of the market actually works. With the conclusion of last night FED meeting, I think
I have succeeded.

The idea of FED watching came about in the mid-1980s when US Govt Securities
(bonds, notes, bills) was the in-thing with its powerful trends. Then, economists
began their career in all this FED watching stuff. If I remember correctly, this was
triggered by a book all about FED watching, about reading between the lines of
FED's minutes of meeting. This economist bullshit lasted till today and I am sure
will go on for many years all because of human vanity. I cannot remember the
name of the book but it was quite popular in the mid to late 1980s.

Through the years, I have seen otherwise. I have seen it is no point reading all
the economists spouting rubbush, all the news reports repeating those rubbish. I
have seen people unnecessarily being swayed by these useless talks.

You want to have reliable answers, look to the market. You will find it there.

I know there will be some who will disagree with me. This is fine. Afterall this is
how life is. People are always in disagreement. Otherwise how to explain that for
every buyer there must be a seller for the market to exist? (In a bigger picture,
why are there always wars in the world we live in? Is it for us to exist? Perhaps if
we all love one another and there is no more wars then the world will cease to
exist and we will exist in another realm. Perhaps.)

I am not sure whether something like this has been done anywhere else in the
world but you sure can find this done here in Chartists United. What more done
in "realtime" before the FED meetings. Since I think I have succeeded in this little
task, I will end it here. I will leave you with this, hopefully, useful pointer in your
arsenal.

Note: How embarrassing! Came back to reread and noticed that should be Chartists United (not Chartists Unlimited).

I had thought that the market (CBOT Fed Funds futures) was deciding
a rate CUT to 5.00 pct towards the end of the year either in Nov or Dec.
But now it seems there might another decision earlier in Aug. So two cuts,
first to 5.00 pct in Aug and then to 4.75 in Nov/Dec. Tentatively the chart
say another one in early 2008 to 4.50 pct.

Why do market need to cut rates? Usually it is because the cost of money
is expensive and need to make it cheaper. What economic condition
then would cost of money be expensive at the current rate?

Yeah, recently, now and then you hear all those rubbish again from
economists and the media trying to frighten you with prediction of another
rate hike, didn't they?

Now, why does the market think that rates need to be lowered. Why
would cost of money it be expensive?