The atmosphere on the stock exchange is very special since September. Indeed few investors thought the Subprime crisis was over, which was a possibility, but actually nobody knows for the moment. Nevertheless the federal reserve announces yesterday a decrease of O,25%, which brings the interest rate to 4,50%. In spite of good figures, from the American GDP with an increase of 3,9% the FED is still showing her fears toward this crisis.
In my opinion the FED made a mistake by decreasing the rate, for two main reasons. First, from now on the US dollar is even weaker and has reached a record with the exchange euro rate (1,45). Second, Another factor important is the oil baril which has reach a peak of 95$. Those two factors can hide future issues that the United States will have to face. By decreasing the interest rate, the inflation is going to increase even faster which is not good for the consumers. We can already see this by the skyrocket increase of the Oil. 3 weeks ago the increase of the petrol was one of my articles, where I was explaining that the Oil should reach the $100, today the brent is negociated at 96 dollar which is a new historical record. You may wonder how come there is this kind of increase, this is still due to the decrease of interest rate which give a facility to all the world to buy oil since the dollar is weaker, and that is why the prices are going crazy !
I am very worried regarding United states situation, indeed when the united states will have to increase the interest rate in order to slow down the inflation, the financials markets are going to react in a bad way. This is due to the fact that the investors are from now on, reacting according to Fed’s decision which is really risky ! Thanks to Fed’s summer decision, the stock exchange didn’t collapse that much, but from now on, it is the everyday life consumers which are paying at a high price, goods that they need for their leaving like petrol!
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