The Big Decision: Fed Statement Means Everything To Scared Market
At 2PM ET, the Federal Reserve will give their statement on interest rate policy. While interest rates will not change, the big questions is, does the Federal Reserve cut more money from their quantitative easing? In December 2013, they cut $10 billion, going from $85 billion to $75 billion. It is widely expected that they will taper another $10 billion today.
Economic news in China is poor, currency problems are popping up from Argentina to Turkey and even economic and earnings news in the United States is mediocre of late. The markets are scared. The markets are fearful that a cut in stimulus will put the world into a tailspin. The markets are addicted to QE (quantitative easing) and do not want it cut.
This brings Wall Street into 2PM ET. This announcement is huge. If the Federal Reserve cuts more money from the stimulus, look for major selling across the globe to continue. Please note that the markets are lower today, expecting some sort of cut. On the other hand, if the Federal Reserve does not taper, expect a major reversal and a snap back rally to begin. While it is doubtful we will see new all time highs, it is likely a bounce to 1,820 will occur on the S&P 500.
Once again, this announcement will either kick-start major selling, easily another 500 points down on the Dow Jones Industrial Average, or a strong rally in the markets. It is a big one, stay tuned...