The trash-talk since the rate cut focused on whether Greenspan has lost his touch after successfully guiding the economy through a record 10 straight winning seasons. Survey results show at least 75 basis points in rate cuts over the next several months. Some look for the Fed to cut rates another 50 basis points at the next FOMC meeting, though many thought that the long time span until May 15 argued for an intermeeting easing. Those with the most aggressive expectations saw the Fed effecting a 50-basis point rate cut ahead of May 15, another 50 bp cut at the meeting, and another 50 bp cut subsequently. Economic data over the next few weeks, and to a lesser extent the stock market's gyrations, are seen as the keys in Greenspan's choice in offensive and defensive strategies.
Median estimates suggest little change, though many suggested heightened risk of weak data.
The following week contains the biggies, vehicle sales, NAPM and payrolls. Any surprising softness in the figures could be seen as a possible catalyst for another intermeeting rate cut. The McGraw-Hill Companies Inc. All rights reserved.