Could interest rate cut click like Magic and wake the Bull?

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Mar 16 2008
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The talk and definitely the hope of investors now is whether they’re seeing the worst of the Wall Street. Since Nov 2007 Dow Jones has been plunging from the high of 14,000 to slightly above 12,000. In fact the 12,000 is the psychology level that almost everyone is watching very closely especially the futures traders. Feds have been cutting interest rate non-stop (from 5.25 percent) to the current 3.00 percent while the latest move from central banks will see $200 billion to be pumped into the financial markets to help ease the strain from the credit crisis.

Months of anxiety of the direction of the world’s biggest market could come to an end, if experts believe so. As much as analysts would like to think that the current level is the bottom and the stock markets could only go up north from here, nobody dares to declare “confidently” that we’ve indeed seen the bottom and the beginning of a recovery would happens very soon. The news of bailout required by investment bank Bear Stearns Companies Inc. last Friday somehow shattered the already fragile little confidence left but Goldman Sachs somehow believes it was a small crisis confined within Bear Stearns itself and not the whole stock market.

DJIA chartThe starts of first-quarter earning announcements could clear some uncertainties and would help to in finding the actual bottom. Bernanke’s boys are expected to cut the interest rate next Ben Bernanke to cut 50 75 or 100?Tuesday but as usual the question remains is by how much. Economists think one-half of a percentage point is expected while hope for a three-quarters or even a full point cut. Regardless of the rate cut’s quantum the U.S. dollar is expected to be at the losing end.

In fact there’s no magic formula as to the interest rate to be but in order to bring back the glory of Wall Street. It’s all about trying to hit the jackpot and see if the new interest rate could click with current situation and end the current recession.

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