US Economy in the poo

  1. 6,975 Posts.
    G'day folks,

    Whatever else can one interpret from the half percent interest rate reduction to 1.25% overnight signal? That is a 29% cut in the actual rate in one hit.

    This really is make or break for the US economy which has failed to respond to the umpteen other rate cuts over the past your or more and if it doesn't make it things are going to get very very ugly. The US dollar which was already under pressure weakened further overnight so foreigners holding US stocks might even have lost money last night despite the rise in the Dow. Australians, on this morning's rate indicator, came out about square.

    The price of oil was down last night in US$ terms but those to really benefit from this are the rest of the globe whose exchang rate movement has made oil even cheaper. It is also bad news for companies like BHP that get the majority of earnings in US$ which will translate to much lower A$'s - a double whammy with the oil price.

    We are in very high risk territory.

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