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Written by Whiz Kid
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Saturday, 15 September 2007 |
Investors await Tuesday's fed meeting. Most analysts predict the street won't be happy no matter what the Fed does.
The street expect a rate cut of .25%. Most analysts have said that no matter what the Fed does, the street will likely be unhappy. Let's look at the three scenarios:
1. The Fed doesn't cut rates. While most consider this extremely unlikely, it could happen. Fearing a magnified credit crunch and perhaps even a recession down the line, stocks will sell off.
2. The Fed cuts .25%. Since this was already priced into the market, it unlikely will cause stocks to go up. Most likely, this will be a non-event.
3. The Fed cuts .50% or more. While intuitively you would think that this would cause stocks to soar, most fear that if the Fed does this, it will send a message that a recession is more likely than expected. This would cause investors to panic and sell off.
Most hope for a .25% rate cut as well as soothing language from the Fed. I personally feel that the Fed meeting has been so overhyped that any effects from the Fed meeting will be temporary. I don't plan on trading until at least Thursday when the Fed overhype is over.
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