Fed rate cut in the mirror

Detroit is asking: Ford CEO Alan Mulally became the latest high-profile business executive to suggest that the Federal Reserve needs to cut interest rates, according to a report published Friday.

Detroit is near a deep, deep crisis. If the housing will hammer Detroit, probably Michigan will be like the Death Valley.....

Recession?

Think of this:

• Fed Rate: 5,25%.
• ECB: 4,0%. Near a new increase.
• Month after month, new starts in homebuilding decrease.
• Mortgages and foreclosures, rising.
• Investor confidence in Germany, at the lower level from the last 8 months.
• Nikkei performs poor, even with a 0,5% rate of BOJ.
• Volatility is high.
• Bank stocks are decreasing everywhere.
• Commercial paper reduced dramatically.
• What else do you need for a..............

The Bernanke uncertainty

After all the last week's turmoil, people are much more uncomfortable. We are like in a big nine meters sea, particularly if you look to the volatility: The Chicago Board Options Exchange Volatility Index stayed near the highest since 2003 after the Fed unexpectedly reduced the rate it charges banks for loans on Aug. 17 .

The Friday's comeback, probably was a technical rebound together with an emotional reaction to the FED's reduction. This confirms our vision: The Fed said it reduced the discount rate to 5.75 percent because risks to economic growth have risen ``appreciably.'' The statement was a departure from the previous week, when central bankers kept rates unchanged a ninth straight time and reiterated inflation was their ``predominant'' concern.

But after all, we will focus in these two main issues:

• Goldman Sachs Group Inc., whose hedge funds lost $3 billion in August after the S&P 500 declined 6.9 percent from a July 19 record, said in a letter to investors last week that a ``significant investment opportunity'' now exists.
• The Fed's actions have been less predictable for investors since Chairman Ben S. Bernanke took over in February 2006 after more than 18 years under Alan Greenspan's leadership.

FED: rethinking the rates?

Mortgages, real estate, twin deficits and "war on terror" budget, are damaging US economy.

Master Greenspan has warned, about a possible recession. Bernanke have dismissed the Greenspan thinking without clear evidence.

Now, the market is waiting for rate cuts: Options traders are starting to say the Federal Reserve may cut interest rates three times this year as the housing slump threatens the economy's growth.

We always believe in Market. After this, Bernanke will be in a turmoil: to tackle some inflation threat, or to put some gas on the economy.

Federal funds rate unchanged at 5.25 percent

As expected the Federal Reserve left interest rates unchanged at 5.25 percent

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