October 30, 2007

Pre-Fed Update

So I was pretty much dead on: GS went to from 190 to 240; GOOG went to Pluto; oil closed at $93 yesterday; and gold went from $720 to $792. As for Dow 15000, wait a month. I was even right about Angelina Jolie; I was wrong about the corn, though.

Tomorrow the Fed will cut .25 because, and this is important, everyone expects them to. I think they would rather not cut, because they see an inflationary picture, high oil, high gold, and strong employment, and no obvious slowdown in consumption. But the Fed game is about managing expectations, because surprise actually hurts the market more than the "wrong" decision. In this case, though, it's the right one. The inflationary picture only applies to rich people; to the others, the picture is recessionary: they're living on credit. Or off their house's value, which turns out is made of gingerbread.

If you want the next investable tip, it's Vegas: put money down on a Republican President. Or, if I am wrong and they don't cut, double down on Clinton.

(Long GOOG, gold, oil; still short Iran, and about to cover on Angelina Jolie.)