The Fed decided on 75 basis points and immediate trading shows that this is a little less than what investors were expecting, but acceptable.

The anticipation has been for a cut between 50 and 100 basis points, and this means anything less could knock out DOW gains from the last day.  Of course, the higher the cut, the harder the dollar gets hit.


Is it the Fed or the invisible hand running the economy?  It looks like the investors and independent actors are looking for government support, anticipating the level of intervention, and adjusting prices before any official announcement.

The good news is that commodity prices have faintly declined for the first time in a while.  This indicated that investors with leveraged assets are unwinding their positions, and some of the speculation is leaving the market.  Now we'll have to see how the dollar reacts to the news, because the Dow isn't doing as good as it was before.   

An interesting point to note is the explanation behind the move.  The Fed chairs are warning that the outlook for economic activity shows increased weakness.  Why?  Because these interest rate cuts aren't making it to the consumer. 

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Copyright (C) 2007 Alain Georgette / Copyright (C) 2006 Frantisek Hliva. All rights reserved.