Sunday, August 05, 2007

What next.....

So the world has ended (did you see Jim Cramer lose it on CNBC on Friday?!) and half the free world is now hiding their money under the mattress, but what happens next.

Jim Cramer is looking for the Fed to step in this week and cut rates. This view is not all together isolated. I have heard talk of the Fed cutting as early as tomorrow (Monday Aug 6) and then using the regularly scheduled meeting on Tuesday to explain their thinking. This is all possible, but I am not betting on it. Remember the Fed is still quite concerned about inflation and more then one Fed governor has come out in the last few days calling this Sub Prime meltdown as "contained". Clearly the meltdown has happened quite quickly, and to a greater extent then anyone every thought possible (Ok not everyone...but certainly me). I wish I had answers, but I don't. This is one of those times that I have been wrong (in a big way) and I need to start again. Also this is my last week in the office before a two week holiday. Therefore I will be squaring down as much as possible and look to start fresh at the end of the month. My Predictions are that.....

1. The Fed leaves rates unchanged, but in the statment the Sub Prime mess is mentioned and the Fed states that they are ready to act if necessary.
2. Stocks stabilize (I am not brave enough to say we have found a bottom yet.
3. The dollar does better against major currencies and EM regains its footing (no gains for the momment but stabilizes like stocks).

Good Luck all......and good Forex trading to you....



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