We don't buy this baloney that now, the subprime mess is "contained" just because Countrywide Financial Corpse (CFC) has been bailed out.
The brighter people know that nobody has a clue about the extent of the damage done by subprime. Neither in the USA nor in Europe. In some ways, what is going on in Germany's banks with such exposure is just about scarier than events in the far more transparent US...
And even if the Fed were to cut rates: how on earth can this solve the subprime issue? Certainly, a fed funds cut has to imply that the Fed is deeply concerned about things. Besides, the subprime mess has been building at least for a year - so how can it be "switched off" like a light bulb with an interest rate reduction "wand"?
We remain optimists on China and are re-building positions.