1. How low will the Fed go?
As the Federal Reserve gets ready to meet Tuesday, there is widespread anticipation of a rate cut. About the only question is how far central bankers will go in lowering their benchmark from its current level of 5.25 percent. Chicago economist Robert Dederick says policymakers will ignore strident demands for a half-point reduction, but will lower the rate to a flat 5 percent. “The Fed is trying to contend with a lot of high-risk debt, and it has a priority to keep the economy moving,” said Dederick of RGD Economics. “Luckily, people have great confidence that the Fed can keep the wheels turning.”
2. Greenspan’s book debut
Ahead of the central bank’s policymaking session, former Federal Reserve Chairman Alan Greenspan on Monday rolls out his new book, “The Age of Turbulence: Adventures in a New World,” at a Barnes & Noble in New York City. 3. Cut could slash dollar
If there is a cut in the central bank’s short-term barometer, don’t be surprised if the dollar falls to new lows. Last week, the euro hit a new all-time high against the greenback, climbing beyond $1.39.
4. Little help for housing
The sheer scope of the nationwide housing downturn argues that a single rate cut by the Fed won’t be enough to keep debt-laden mortgage borrowers afloat. A fresh look at the real estate industry comes Wednesday, with August housing starts. Economists are looking for a 3 percent drop to an annual rate of 1.33 million units.
5. Loan defaults to blame
Stock market investors are licking their chops over Tuesday’s expected rate cut, “but any euphoria is unlikely to last because stocks likely will face a period of rapid ups and downs.” That’s the view of Bannockburn-based mutual fund manager Henry Van der Eb of the Gamco Mathers Fund, who blames loan default problems in the European banking system for stirring global pessimism. His bottom line: “Their ratios of debt to capital are seriously out of whack and the problems will take years to sort out.”
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wsluis@tribune.com
