KeyBanc Strategist McCain Sees Another 50bp Fed Rate Cut
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Bruce McCain, Head of the Investment Strategy Team for Key Private Bank, said the FOMC probably needs to deliver at least 50 basis points more in rate cuts on Wednesday to maintain public confidence. McCain said this will leave the Fed the option of taking back the cut once the economy stabilizes.
If the Fed cuts rates 50 basis points on Wednesday, this would bring the federal funds rate from 3.50% to 3.00%. On January 22nd, the fed cut rates 75 basis points.
McCain said, "Equity valuations are starting to look enticing and the money now sitting in cash and low-yielding bonds could fuel a significant stock market rally once investors regain their nerve."
McCain also thinks there was more to the recent market meltdown in Europe than the misdeeds of the Societe Generale rogue trader, suggesting the sell-off may reflect slowing in those economies. He suggests the European Central Bank (ECB) will eventually have to cut rates too.
If the Fed cuts rates 50 basis points on Wednesday, this would bring the federal funds rate from 3.50% to 3.00%. On January 22nd, the fed cut rates 75 basis points.
McCain said, "Equity valuations are starting to look enticing and the money now sitting in cash and low-yielding bonds could fuel a significant stock market rally once investors regain their nerve."
McCain also thinks there was more to the recent market meltdown in Europe than the misdeeds of the Societe Generale rogue trader, suggesting the sell-off may reflect slowing in those economies. He suggests the European Central Bank (ECB) will eventually have to cut rates too.
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