The stock market was already brain-dead, but itís no longer even twitching sporadically as traders prepare for what promises to be a less-than-momentous announcement from the FOMC on Wednesday. Wall Street is expecting a rate hike of 25 basis points, which would put the fed funds rate at 1.875% Thatís the exact midpoint of the target range of 1.75 to 2.00 percent, making it even less likely that the markets will react much. Even so, we should never dismiss the possibility of a wacky response no matter how boring the news. The ostensible excuses for the rate hike will be that employment is strong, inflation moderate and consumer spending lukewarm. However, the actual reason the Fed has been raising rates is to be in a position to lower them when the economy weakens. This seems unlikely to occur unless catalyzed by falling stock prices, which would create more urgent reasons for loosening than the Fed could handle. The silver lining for investors, at least as far as one could surmise from the financial pages, is that this bull market will last forever. If you donít subscribe but want to have a peek and join in the fun, click here for a two-week free trial to Rickís Picks, including access to a 24/7 chat room that draws great traders from around the world.
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