Friday - January 11, 2008
Yesterday Federal Reserve Chairman Ben Bernanke acknowledged that "in light of recent changes in the outlook for and the risks to growth, additional policy easing may well be necessary." In other words, the Fed is going to cut rates at its Jan 29-30 meeting.
A rate cut had been previously assumed by the markets, which is why stocks did not post a big rally in response to Bernanke's speech. (Stocks rebounded in the afternoon on rumors of a potential buyout of Countrywide Financial (CFC).) The only question among economists and traders previously was whether the cut would be 25 or 50 basis points. Expectations for a 50-basis point cut at the January meeting are now going to rise with a strong possibility of yet another rate cut at the Mar 18 meeting.
Our Director of Research, Dirk van Dijk, posted two analyses of Bernanke's speech on our analyst blog yesterday. For those of you that missed it, the commentariesare still available on Zacks.com: http://at.zacks.com/?id=4241 and http://at.zacks.com/?id=4249.
The Fed Chairman's speech is available on the Federal Reserve web site: http://www.federalreserve.gov.
The Cleveland Federal Reserve Bank publishes a chart (updated daily) summarizing what futures markets are forecasting as the most likely change in interest rates, if any, at upcoming Fed meetings: http://www.clevelandfed.org (Click on the monetary policy link near the upper right-hand corner.)
Wishing you prosperity,
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State Street Corporation (STT) has a very strong history of surprising and beating analyst earnings estimates. In the past seven days, eight covering analysts have increased next-year's projections. Read the full analysis on STT now!
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Sciele Pharma (SCRX) - Promising Platform. For the full Zacks research report, click here.
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Total Net Income Expected to Fall 8.5% for the S&P 500
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4. ZACKS EXTRA
Value Investing Home: Go there now.
Other Investing Education Resources
Mitch Zacks, Portfolio Manager at Zacks Investment Management, says the stock market is headed higher and the Fed will cut rates again by month's end. Listen to his audio here.
Verasun Energy (VSE)
The company has room for upgrades, which makes it an attractive contrarian play to the experts at Schaeffer's. Read the complete commentary.
Options homepage: Go there now.
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Regards and Happy Investing,
Charles Rotblut, CFA
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