Can Ben, Banks Save Us?


Bernanke and the Fed helped contain the credit crunch last month, but the action in the market Wednesday suggests they didn't quite do the job. They'll get a chance to soothe the market Thursday, when Bernanke testifies before Congress. How do you trade?

Also Thursday, the Bank of England and European Central Bank will decide on interest rates.

Deutsche Bank's Chief US Fixed Income Economist Joe Lavorgna joins the panel for this conversation. Following are excerpts.

What will the message be from the Fed?

That the economy has some downside risk says LaVorgna, but monetary policy- makers are worried about inflation. That’s the worst possible news for equity investors because they’re getting hurt on growth and inflation risk. I don’t think they’re going to greet that message well.

How will events in Europe play in our markets?

I think we will get a repeat a few weeks ago, says LaVorgna. The Chairman is really in a bind, because he either has to talk the market off the ledge, or actually ease rates. The price action will probably get worse if the Fed disappoints the market.

What do you make of the dollar comments made by the Chinese?

It’s sort of like this is the perfect storm, everything is moving against the American economy, says LaVorgna.

Except the exports…

I do believe the weaker dollar will help exports, adds LaVorgna. And I don’t want to underestimate the dollar and the strong global economy to help America grow. I still believe.. that we’re going to get through this current environment without recession.

S&P 500

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Trader disclosure: On Nov. 7, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Najarian Owns (CSCO); Najarian Owns (AMZN) Options, (C) Options, (DISH) Options, (GOOG) Options, (LDK) Options, (YHOO) Options; Finerman's Firm Owns (AEO), (WMT), (TWX), (TSO), (YHOO); Finerman's Firm Is Short (MDY),Short (IWM),Short (IJR), Short (MBI),Short (LEH),Short (MER); Finerman's Firm And Finerman Own (GS); Finerman's Firm Owns Russell 2000 Puts; Seygem Asset Management Owns (EEM), (F), (GFI), (GLD), (HMY), (LDK), (YHOO); Finerman's Firm Is Short (SPY)