Federal Reserve Interest Rate Decision
The Federal Reserve Governors will meet on 9/18/2007 to make a decision on interest rates. Historically, this has been a good sign for the stock market. Take a look at this attachment on the Fed and historic rate cuts.
Will this time be the same or is it too little to late? The events unfolding in England with some of their lenders and banks is very disturbing, but remember, all bottoms are created when you have a large amount of fear. We definitely have a large amount of fear right now.
The markets are expecting at least a quarter point of easing in the Fed Funds target rate. Whatever they announce, it will be the reaction that matters. Most traders and analyst seem to feel that we will sell off afterward since an easing is priced into the market at this point. I would be careful about shorting right now because that is a really crowded trade. The other event to consider are the brokerage stocks earnings. Lehman Brothers comes out early before the market opens on Tuesday 9/18/2007 and will set the tone for the day. The anticipation is really building for something big to happen. This one seems like a toss up on which side it will swing.
Hey Eric,
What do you think of the current state of the market, as of 11/21/2007? A lot of bad news especially from the finance sector has brought the overall market down, and with the Feds meeting up in Dec 11th, what are the prospects of a rate cut? Will it make a difference? Hypothetically speaking, even if the rate is cut, there may be a short-term rally for a couple of days, but what about in the next 6 months? The reason I ask is because I am thinking of placing a $800 call option on GOOG for March 2008, given GOOG’s increased valuation to $900 now by Credit Suisse. Will the market be able to push through and get GOOG moving past the $800 level?