Roller Coaster Week Ahead

Chalk this article up as just one person's opinion. I don't usually make predictions about coming events. Today's an exception. I think we're in for a real roller coaster ride this week in the stock market.

The Fed starts a two-day meeting on interest rates and the economy tomorrow. The meeting culminates in their policy statement Wednesday afternoon a little after 4pm eastern time. Many seem to think the Fed will drop interest rates another ¼ point, to 4.5 percent. I think the debate leading up to the actual announcement will shift market sentiment first one way and then the other.

It'll be an intense debate, too. Proponents of a cut say the problems in the housing market are leading us into recession. They point to falling home prices and the lack of credit as the principal reasons the Fed should loosen up and let more money flow into the economy. The rebuttal to that argument points to the most recent quarter's 3 point expansion in the US economy. Opponents of a rate cut argue that consumer spending and exports, which have recently been both high and on the increase, have been fueled by an already too cheap Dollar.

We'll all know which argument won over the Fed when they issue their policy statement Wednesday after the market closes. Which direction stocks go on Thursday is anyone's guess; but it'll move. By Friday, all this new information and the emotions that go with it will be priced into the market. Between now and then it's sure to be a roller coaster ride.