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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: TobagoJack who wrote (25065)11/6/2002 2:34:32 PM
From: EL KABONG!!!  Read Replies (2) of 74559
 
Hello Jay,

Well, the Fed has announced a 50 bp cut in the interest rate just a minute or two ago... The GOP establishes majority status in both the House and the Senate... What do the events of the past 24 hours mean for domestic and foreign stocks?

I think that the interest rate cut bodes ill for the markets, though undoubtedly the initial market reaction will likely be a plus for stock prices. When you strip away all of the rhetoric that surrounds the rate cut, it is simply an admission by the Fed that the economy is weak, and likely tilting toward further weakness in the coming months. I think that any economic impact from recent job cuts/layoffs will (sooner rather than later) be reflected in numbers showing decreased discretionary consumer spending, and possibly even further CAPEX spending cuts by businesses.

WIth the GOP having the majority role in Congress, we can expect to see most of the Bush administration agenda actively pushed, though not everything on the GOP "wish list" may end up in a bill somewhere. Largely, the government message is likely to become pro-business, but will those messages be enough to stimulate a very weak global economy? I suspect not, which will make for GOP weakness in the 2004 elections.

At least that's how I see things at the moment...

KJC
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