| Fed may cut rates again today
The Federal Reserve is likely to follow its bold action last week to battle an economic downturn with further interest rate reductions, although analysts are split on just what size the future cuts will be.Some believe the Fed will settle into a series of quarter-point moves, especially if upcoming economic reports show the economy is slowing but not toppling into an actual recession.That would mean the Fed will cut its federal funds rate, the interest that banks charge each other, by a quarter point at the conclusion of Wednesday's meeting. It would be the fifth rate cut since last September.Last week, the Fed announced a surprise three-quarter-point cut which drove the funds rate down to 3.5 percent. It was the largest reduction in this rate in more than two decades and the first change in the funds rate between meetings since the immediate aftermath of the September 2001 terrorist attacks.Federal Reserve Chairman Ben Bernanke and his colleagues held an emergency videoconference call on Jan.
Dollar Done Dropping?
Ironically enough the fall in the equity indices was one of the key drivers of dollar strength. As stocks faltered, carry was unwound pushing EURJPY well below the critical 160.00 level and taking EURUSD down with it in the process. On the economic front, US data was mostly horrid with Retail Sales, Building Permits and Philly Fed all falling off the cliff. On the bright side, TICS came in much better than forecast suggesting that at least for the time being capital flows will not be a problem. Finally the U of M survey surprised to the upside climbing back from its depths in the 70’ s back to the 80 level. Overall the news suggests that while 50bp cut is a strong possibility, any talk of a "panic" 75bp cut must be put to rest as the Fed tries to reserve its ammunition. In the upcoming week the US calendar is nearly barren with only Existing Homes on the docket.
Righting wrongs in the sheriff's office
As you undertake consideration of a replacement for Sheriff Mike Carona I hope you will do so with due diligence and thoughtful, rather than expedient deliberation. The department has been functioning at a satisfactory, if not excellent or optimum level. Here are some issues I would like you to consider: Should the position of sheriff be an elected position or appointed, where accountability to you as the Board enables swift and effective action should that position be abused or have negative consequences for the Orange County population as a whole? Let's not have another fiasco. You need not feel time pressure to replace the sheriff in the next few weeks with someone like Ralph Martin, Jo Ann Galisky or other readily available folks. Let's get the best person for the job who has not just a vision, but has implemented their vision and has proved results.
October 2006
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5 GIs Killed In Northern Iraq
The deaths raised to at least 3,934 members of the U.S. military who have died since the Iraq war started in March 2003, according to an Associated Press count.
In Other Developments:
A former city official was stabbed to death along with his wife and daughter in their home in a predominantly Shiite neighborhood in northeastern Baghdad, officials said Sunday. The knife-wielding attackers stormed the two-story house late Saturday, killing Ahmed Jwad Hashim, his wife and their daughter, and leaving a visiting nephew seriously wounded, according to police and hospital officials.
Facing criticism that the Iraqi government has failed to take advantage of the lull in violence to make political progress, Prime Minister Nouri al-Maliki threatened to form a new government if ministers from the main Sunni bloc refused to end a boycott of his Cabinet.
The Fed's stagflation fear
That's up from 2% in the third quarter and was higher than the 2.5% that economists were expecting. As I wrote in Monday's Morning Buzz, inflation is still something the Fed has to be concerned with. The latest number proves that. Still, this probably won't be enough to keep the Fed from cutting rates by another half-of-a-percentage point. But the threat of stagflation, a period of both economic sluggishness and rising price pressures, has to weigh on the Fed when it puts together its carefully constructed statement. The central bank needs to continue to talk tough on inflation and may need to signal to the market that after today's expected half-point cut - which would leave the federal funds rate at a pretty accommodating 3 percent - that it's time to hold steady for awhile.
Govt set to sign contract for MRT-7 in April
Of the total project cost, $926 million will be raised through borrowings while the rest through equity. But Mamondiong stressed that the MRT-7, unlike the MRT-3, will not carry a sovereign guarantee and that Universal LRT is on its own in sourcing funds for the project. The MRT-7 will run from SM City North EDSA along North Avenue, passing through Philcoa, University of the Philippines-Diliman, Tandang Sora, Don Antonio, Batasan, Regalado Avenue (Fairview area), all the way to San Jose del Monte. Mamondiong said an estimated 600,000 commuters a day will benefit from the MRT-7. The average fare will be from P27.00-P40.00, which is less than half of what commuters pay for the route. The DOTC expects groundbreaking to start later this year or early next year.
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