Tuesday, January 22, 2008

August may be a good model for January [Update 2]

I thought about posting this yesterday. Jeremy Siegel's Yahoo Finance column, "Why Bernanke's Critics Have it All Wrong," posted August 29, 2007, lays out the financial meltdown that started in August. Then, Bernanke surprised the market with a 50 bps federal funds rate cut.

No one likes to call a bottom for fear of being wrong, but the .75% rate cut just announced by the Fed may be enough to float the markets up for another 6 months. I like what Boris Boehm of Germany's Nordinvest said, as quoted in the Times, "There’s an old saying in the market that banks lead us into recession and banks lead us out."

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