The interest rate decision tomorrow?

[#1]

Firstly what is the formites consensus and secondly what is the market expecting?

[nala]

going long

[nala]

going long

[gareth01]

def cut tomorrow, just to much negative economic data...maybe a bounce then tomorrow - long banks??

[koos2]

Isn't this rate-cut already price into market?

[HateGauteng]

Recon local news moves the market much? Tomorrow there'll be data on international trade as well as jobless numbers comming out of the states. Which would be a stronger market mover? SA interest rates vs US data; in the event the news has an opposing effect?

[SimonPB]

it's not about the data .. it is about the level or surprise .. data doesn;t move markets .. surprises move markets ..

[#8]

I agree. I think we will get a cut and the banks are looking attractive.

[HateGauteng]

I still recon a surprise in the US will overwhelm local markets.

[SimonPB]

sure, but it is the surprise .. not the data that matters .. an surprise can be good or bad ..

[john_1]

Last time I checked banks make money by lending and a cut in the repo rate is in effect a cut in their margins and since the bad depts are already accounted for through bad dept provisions..this sounds negative banks possitive industrials to me..

[SimonPB]

john 2 thorts .. rate cut will help bad debts even more ..
but here's the fun 'margin' number .. a bank borrows at 8% and lends at 10%, 20% mark up .. rates drop 50 points, now they borrow at 7.5% and lend at 9.5% .. mark up now 26% ..

[john_1]

Ah! the ligh goes on.

[#14]

So Japanese banks sit at 100%+ markups. They must be filthy rich.

[DST]

See banks margins in pictures...

http://www.tickertalk.co.za/blog.php?user=stuart&blogentry_id=2244

[olilau]

WOW, simon. admittedly, never thought about the margin. good one. but i disagree on what moves markets. of course data moves markets, just not in "surprise measures". otherwise by implication, markets are dead unless there is a surprise either way. imho, its like the ocean, calm waters, low swells represent normal data absorption and concomitant market reaction (or adjustment) - add a hurricane, different story.

[kemp]

margin improves but profit stays exactly the same 2%

[kwagga]

And US banks soon to follow. That's where the deflation debate comes in.

[Wizard]

It's the bottom of the cycle. Inflation should start creeping in soon and rates going up. Waste of a move if u ask me .no need to cut tomorrow!

[#20]

yep, and those bleedin rat bag #$#@$b beep son2%$%#@%34 beeep beeeep are not offering prime minus 2 anymore - so their markup is even bigger! And with property prices on the marginal up again, they will be lending bigger amounts at bigger margins