Stock Market Analysis

Monday, October 29, 2007

Countdown To Fed... 2 days...

Analysts are expecting a 25 basis points rate cut in 2 days time in order to drive recession out of the door. Fed fund futures has priced in a 92% chance of a 25 basis point cut too. Such a rate cut would no doubt be the final one in a long time. The Dow continues to price in the expectation of a rate cut today, abeit on lower than average volume as most investors sit on the sideline. Tomorrow is likely to be another flat day in anticipation of the Fed release.

No matter how the rate cut eventually turns out, danger is already building up secretly in the background as oil price heads for the $100 mark and gold prices continues to surge. Eventually, when investors turn their attention from the fed fund rate, they will notice that oil prices have reached a level which could potentially be threatening to earnings in the short run. Danger continues to lurk in every conceivable corner slamming risk managers like myself with challenges from every front. Life has never been more challenging. Amen! :)

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