Not a chance in hell.
As someone said that would make too much sense. The Fed will cut at the next meeting. 0.25 to 0.5%.
2 yr t-bill is at ~2%. In 6 months, Fed funds will be at 1.25%, otherwise 2 yr rate makes no sense.
Listen to the market. When Fed funds are at 1.25% people will be dying to get into equities. But will have to pay a lot more.
<<When Fed funds are at 1.25% people will be dying to get to equities. But will have to pay a lot more.>> Smartest comment on this message board tonight. Pay heed, Gadgeteers.
My thought (for what its worth) is that while it may help (a little) it is simply too reactive.
If Bernanke was PRO-ACTIVE he would have done this early last week. That would have helped stanch the crisis of confidence sentiment the economy has with the current Fed.
They can cut the rates all they want & it wont jolt the economy like it would have last year because the lines of credit that were available to people last year are GONE GONE GONE. This economy is going in the dumper because we have a credit crunch on our hands & our economy is gonna suffer big time because of it. Good luck all.
Actually, a cut tomorrow would hurt. The markets would rebound, but only temporarily. We need a washout and that could happen tomorrow if we are down precipitously.
A FED move tomorrow would only prolong this decline....
I am lighting a candle tonight in hopes that there is NO rate cut tomorrow. It would reek of desperation and have absolutely no impact on events in the short-term. In the long-term it would be more disruptive than many have considered, IMO.
Oil is back <$90. Gold is trending down. US equities are reasonably valued if P/E holds... but that is the problem: no one believes guidance at this point.
In hindsight, damage will focus on financials. In the meantime, however, we will see indiscriminate carnage.
This is my personal opinion. Please do your own research.
A rate cut won't change a thing. Rates are already low, thats NOT the problem. Look where the mkt was before ANY cuts, look where it is today. Have you seen any indication lower rates have helped?
The truth is the Fed is damned if they do and damned if they don't. But, at the very least they should wait til the mkt stabilizes so as to ensure a better chance that a cut will coincede with a bounce so that it at least looks effective to those who don't understand why the markets are acting this way. Thats really the most they can hope for.