A balance act hard to top..

The market is always tricky, if there is indeed a crystal ball for the market, gazing through it must be like seeing into a kaleidoscope, colorful, multi-facets but definitely chaotic.  It will be even more difficult to make sense to what will happen next week even if you have the help from the oracle.

 

It will be a balanced act; it is the threat of inflation against the threat of slowdown of the economy, so, chose your poison.  On another time, the choice might be easier, But now?  We are in the midst of a recession (slow down whatever), and yet there is a genuine inflationary pressure and you can certainly feel it when you stand by the gas pump or go shopping in a grocery store. 

 

So, it will take a lot of acrobatic acts and a lot of wits for FED to satisfy its mandate to fight the inflation and maintain the economic stability at the same time, and of course, to make Wall Street happy.

 

It is widely believed that the FED will cut the rate and hint a “pause” in its statement.  This way, it can please the investors and at the same time, claim its vigilance against inflation.

 

If it plays out like planned, the market may like it.  That means we may see continued ascend of the market.  

 

The dollar definitely will get a boost if the rate cut is stopped, also, if the earning continues to be as good as we have seen, that will help the dollar too.

 

In terms of sectors, we may want to avoid commodities but favor consumer discretion, transportation and technology.  

 

Of course, predication of future is not without its perils.  What if FED decides not cut? What if Bush decides to attack Iran?  So, one has to remain alert, and if any premise proves to be wrong, then an adjustment of course needs to make quickly.