From the Fed Minutes released today...

Fed almost out of bullets, but we are just entering the point where effects from last year's cuts will be felt.

Earnings are bad, but not destructively terrible and U.S. business (a large part of which depends on foreign trade) has the wind at its back.

"In their discussion of the economic situation and outlook, FOMC
participants noted that prospects for both economic activity and
near-term inflation had deteriorated in view of increasingly
fragile financial markets and tighter credit conditions, rising
prices for oil and other commodities, and the deepening
contraction in the housing sector. Home prices had declined more
steeply than anticipated, and the weakening housing market,
combined with a softening in labor markets, appeared to be
weighing on consumer sentiment. Businesses also were seen as
becoming more pessimistic and cautious, despite a strong foreign
demand for U.S. goods. Strains in financial markets had increased,
portending a possible further tightening in the availability of
credit to households and businesses. Against this backdrop, many
participants thought some contraction in economic activity in the
first half of 2008 now appeared likely. The economy was expected
to begin to recover in the second half of the year, supported by
recent monetary policy easing and fiscal stimulus. Accommodative
monetary policy and a recovery in financial markets along with an
abatement of the downdraft in housing activity were expected to
help foster a further pickup in economic growth in 2009. However,
considerable uncertainty surrounded this forecast, and some
participants expressed concern that falling house prices and
stresses in financial markets could lead to a more severe and
protracted downturn in activity than currently anticipated.
Participants noted that recent readings on inflation had
generally been elevated, that energy prices had risen sharply,
and that some indicators of inflation expectations had risen.
Most participants anticipated that a flattening of oil and other
commodity prices and easing pressures on resources would
contribute to some moderation in inflation pressures. Nonetheless,
uncertainties about the outlook for inflation had risen."