Friday, August 24, 2007

The Helicopter remains firmly grounded (US rates won’t be cut)

The Fed keeps its head

"Investors should think twice before assuming that Mr Bernanke will soon act to reduce the federal funds rate. While mortgage lenders and financial institutions heavily invested in American mortgage securities have struggled mightily, recent reports from the broader economy have been anything but uniformly negative. Employment numbers have held up even as home construction has collapsed. For the moment, conforming mortgages remain stable and large firms unconnected to the home-mortgage market have yet to experience serious trouble. Moreover, financial markets remain in positive territory for the year, despite the past week’s gyrations. Do not expect Mr Bernanke to bend to the demands of overextended investors suffering through short-run volatility." - Hmmm, so the "real economy" is ok?

Posted by drewster @ 11:18 AM (511 views)
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