What overseas markets expect now

An investor walks past a stock price board in Shanghai.

TEXT OF INTERVIEW

Scott Jagow: As you might expect, the Asian markets saw a big rebound today. Investors cheered the Federal Reserve's surprise decision to cut interest rates three-quarters of a point. Tokyo stocks gained back about 20 percent of what they lost the last couple days. Hong Kong shares shot up 11 percent -- almost wiping out their losses earlier this week.

Joining us from Hong Kong -- Bruce Einhorn, an editor with Businessweek Magazine. So Bruce -- the Fed cuts interest rates and that makes everyone happy?

Bruce Einhorn: Hahaha. Well, at least it's something, right? So it's enough to stop some of the panic. And Hong Kong, for instance, is a special case, right, because Hong Kong was up 10 percent. Hong Kong has a currency that's pegged to the U.S. dollar. And so when U.S. rates go down, Hong Kong rates go down, too.

Jagow: So what do you think the overseas markets will be expecting now?

Einhorn: I guess they're going to be waiting to see what comes next from the Fed, how many more rate cuts we're going to be getting. I'm not sure that they're looking for too much from politicians -- they didn't seem to be all that impressed with what President Bush announced last week.

Jagow: But do you think just cutting interest rates, in the eyes of Asian investors, really gets at the problem with the U.S. economy?

Einhorn: No -- but it at least gives them something to look to. The other thing is that it's not just the U.S. that investors are worrying about. There's a lot of worry about what's happening in Beijing. The government is intent on slowing things down, and at the same time, they've got pretty high inflation, they've just imposed some new price controls. There's a lot less transparency when it comes to policy-making from Beijing, and so there still is quite a lot of uncertainty about what is really happening.

Jagow: Bruce Einhorn from Businessweek Magazine in Hong Kong. Thank you.

Einhorn: Thank you.

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