If Greenspan and his troop of buddies were to indicate in fedspeak that they were taking the three rate reductions away today, we would tank as of now and so would the emerging markets.
Probably right, but certainly not justified on fundamentals. This would create a massive buying opportunity.
If I really thought it was going to happen, I'd probably go to 100% cash, then short the most volatile index I could find. But I'd have to be really certain. And if I was that certain, then I wouldn't want to ever own stocks again. ;-)
Seriously, there's lots of options for the next FOMC.
1. No rate change, no bias change
2. No Rate change, bias changed to neutral
3. Rate increase (probably a token 25bp), no bias change
4. Rate increase, bias changed to neutral (balanced)
5. Rate decrease...
6. ...
I would say that options 1,2 and 4 are equally probable and option 3 about 1/2 has probable as the others. Thus with that math, it's about 60 / 40 against a rate change. And if only the economic factors were examined, there's no chance whatsoever of a rate increase.
As usual, if I ever get off the fence, I'll let you all know what my opinion is. :-)
Ian. |
