What Will The Fed Do?
You can take all of the Wall Street pundits and
forecasters and lump them together but they still will not be as accurate in predicting
likely Federal Reserve interest rate moves as the federal funds futures
contract. The federal funds futures contracts is the place where people put
their money where their mouths are. It has a 97% accuracy in the days preceding
a FOMC meeting and is the best forecaster of what the Fed will do.Â
The July fed funds futures contract
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PowerRating) touched a new high today, implying that traders have ratcheted up to 56% their
expectations of a 50-basis point, or 0.5%, interest rate cut coming out of this
Wednesday’s FOMC meeting. This is clearly a market that is certain of a
25-basis-point cut but undecided about a more aggressive 50 bp move this week.
The August contract
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summer while the September contract
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Blue chips are lower but tech stocks are holding at
break-even levels in a wait-and-see week. The Dow is down 84 at 10,519, the
Nasdaq is up 1 at 2035.83 and the S&P 500 is down 6.12 at 1219.23.
Home Depot
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a Barron’s article over the weekend said the retailer was overpriced.
Walgreen
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after missing views by a penny despite rising sales.
In tech, Intel
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it would stop using its own semiconductors and employ more Intel chips in its
servers.
Biotech
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sector down 4%. Merrill Lynch downgraded Biogen
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down 11.41% after closing below its 200-day moving average Friday on heavy
volume.