US Fed: The recession is over

The US central bank now has joined in the chorus. The US Federal Reserve has come out with a survey that confirms that the US economy has turned around a corner based on reports from regional banks. This survey precedes the monetary policy meeting, to be held in two weeks. If indeed the US Fed accepts at the meeting that the recession is over; then it is likely to increase interest rates, currently pegged at zero.

We continue to be of the opinion that investors should not get too optimistic. Several noted investors including Wilbur Ross and David Dreman have also sounded a note of caution. In fact, Warren Buffett has recently warned that we will have to deal with the side effect of the enormous dosages of monetary medicine that continue to be administered.