30 April 2008 - 19:20Market Commentary 4/30/08

Another Fed meeting, another rate cut. This was predictable and the dollar derives no support from this cheap money policy to keep the big banks who are cash poor afloat. GDP came out a tic higher than expected and provided some moderate  support for the dollar but  the Fed once again ensured there would be no rally for the greenback. It languishes near all time lows and it is obvious now to most that it’s rally has stalled out. Gold is a good example of this since it was down on the day to it’s lowest price in three months just prior to the meeting then rallied $16 in an hour. This shows that there is no faith in the dollar or the fed anymore and with good reason too. Their ridiculous claim in the accompanying statement that inflation will moderate is pure nonsense. Obviously they need an economics lesson if they think lower rates will make inflation moderate. They are counting on screwing up the economy so bad that no one will make money and this in turn will lower inflation. If that is their idea of a soft landing I hate to think what a hard one would look like. Suffice it to say that I am not bullish on the dollar as long as the monkey shines at the Fed are allowed to continue unchecked.