Tuesday, January 6, 2009

Feds expect "moderate recovery" in 2010

Well the minutes were released for the latest Fed meeting... you know the one where they cut the overnight lending rates to 0%, yeah that one! Lucky banks get to borrower money from each other at 0% interest and continue to charge their credit card customers 24% interest on the money... how nice for them!

Fed minutes indicate that there was a worse than expected 4th quarter in 2008 and they lowered their expectations for 2009. How reassuring right? Part of the problem was that his excellency high exhaulted commander Paulson announced that he would not use the TARP funds to buy bad mortgage assets. We have gone over this many times in previous posts but those just joining us, the TARP funds SOLE purpose was to buy troubled mortgage assets and then Furer Paulson changed his mind after he got his hands on the dough.

Yes it was quite lovely. Anyway he decided to change his mind back again and wound up making their first purchase yesterday. This provided the POSITIVE market movements that should carry us to recover as was predicted when his excellency Paulson was on his knees begging for the cash initially.

Rates are holding steady for the time being but we are keeping our pulse on the markets because any day now rates are going to fall. They are going to continue to fall slowly until they get to the point where they should be now. Once there expect them to remain low for some time until we see recover end of this year.

If there are any fence sitters left in the game it's time to get ready. Market conditions are nearing their ultimate "bottom" and if you wait any longer you will likely miss the boat.