Economic conditions are not changing. Industrial production is mired in recession even as the housing sector remains the major source of
economic growth. Retail sales are soggy relative to the past couple of years, but there may be signs of improvement in the past month.
Perhaps those rebate checks will have a favorable impact on the economy after all. Inflation news is favorable.
This sets the stage for another Fed rate cut at Tuesday's FOMC meeting. Market players are factoring in a 25 basis point cut in the
federal funds target. Once again, investors will focus on the wording of the announcement rather than the rate cut itself. Bond investors will
be discouraged if the Fed indicates this may be the last move. Equity investors would love to be reassured that economic growth is
around the corner.
Markets at a Glance Recap of US Markets The Economy The Bottom Line Looking Ahead
|