每日市場點評 --- January 30, 2008

The Fed Chairman Bernanke finally surrendered himself to the market pressure and cut the interest by 50 bps despite more evidence of spreading inflation. I was quite surprised to see the same Fed Chairman to make several mistakes in a row within such a short period of time. Last December, when the Fed rate was still at 4.50 percent, he and his colleagues were given a chance to cut the key rate by 50 bps. He chose to cut by 25 bps and cited risks of inflation. Then earlier this month, when there were several opportunities for him to make an emergency rate cut in the order of 25 bps or 50 bps to prevent the market from falling apart, he simply passed them. Then last week, when financial market was in free fall around the world, he was forced to cut 75 bps. This time, he should have rather waited for the market to digest already huge 125 bps cut in less than 2 months (considering another 25 bps cut being made today), he simply followed the market consensus and made a 50 bps cut even though inflation was truly trending higher this time. Ironically, the market still sold off after a brief pop-up. On the economic front, we got mixed results this morning. The ADP employment report came better than expected with an increase of 130K job positions, indicating we may get a non-farm payroll number in the range of 100-120K this Friday vs. 75K consensus. The advanced Q4 GDP number, however, came lower than expected. I would like to point out that the former is a forward looking indicator while the latter is a lagging indicator. Based on recent data, it doesn’t seem economy is facing the threat of an imminent recession. Instead, I’m getting more and more concerned about possibilities of run-away inflation. Following the Fed decision, US dollar was under pressure while gold hit another record high. It seems the Fed may indeed have more works to do in the next few months.