AMEX chairman sees FED rate cut and no recession-Looks like Dell still on sale.
Ian:
Here is an interesting piece of news
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Tuesday October 6, 12:59 pm Eastern Time
AMEX chairman sees more Fed rate cuts,no recession
BOCA RATON, Fla., Oct 6 (Reuters) - American Stock Exchange chairman Richard Syron, a five-year veteran of the Federal Reserve, said on Tuesday he expected the Fed to follow through on last week's interest rate cut with further reductions.
''I think the Fed has clearly signaled the direction towards more cuts in interest rates,'' Syron said in a speech to the Securities Traders Association. ''Unless things magically start to improve, we could see one as soon as November 17.''
Syron, who was president of the Federal Reserve Bank of Boston from 1989 through 1994, said falling financial markets were playing a key role in the Fed's thinking on rates, a departure from previous practice.
''The really big shift is that financial markets are now driving the economy, rather than the other way around,'' he said. He said the recent market downdraft had erased $1.6 trillion in value, and that the Fed had to consider that such losses would have an effect on the U.S. consumer.
''We've had a big pendulum swing that has led to a substantial increase in risk aversion on the part of consumers and investors,'' he said.
Syron pointed to falling value in small-caps stocks and a clear market preference for U.S. government bonds versus even top-rated corporate bonds as signs investors have very little appetite for risk.
''You have to worry that the big increase (in risk aversion) is going to affect decisions about buying cars and buying televisions,'' he said, although he said he does not expect a U.S. recession.
Syron left the Boston Fed to head up the American Stock Exchange, which agreed in April to merge with the National Association of Securities Dealers (NASD), the parent of the Nasdaq stock market.
He said there were no major hurdles left to block the proposed merger and the deal would likely close within four to six weeks.
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