Zacks.com releases the latest Analyst Interview. Today’s interview is with Director of Equity Research Dirk van Dijk, who discusses Boeing (NYSE: BA), GE (NYSE: GE), United Technologies (NYSE: UTX) and Honeywell (NYSE: HON).
A synopsis of today’s Analyst Interview is presented below. The full article can be read at http://at.zacks.com/?id=2678.
At the next Fed meeting, do you expect there will be a cut?
I’d say it’s a coin toss. I will say, however, that if we don’t get it, the market is not going to like it at all. The market has definitely priced in a cut. As a matter of fact, they’ve really priced in more than one cut.
More than a quarter-point cut?
More than a quarter-point cut. For the September meeting, there’s actually “standing pat,”“down a quarter” and “down a half” all with about equal probability of the outcome. And if you go out to the October meeting, the highest probability – according to what the prices on the options and the futures, how the Cleveland Fed calculates this stuff – is down at four-and-a-quarter. Which is 100 basis points – that’s a huge cut.
So the market has sort of priced-in this help. The Fed, from its comments – not only from Bernanke today, where he was really hedging things. Mostly, he gave a history lesson on the development of mortgage finance over the course of the last century. Fascinating reading, but it doesn’t have a lot of direct bearing whether there’s going to be a cut in September or not. They’re going to be pretty disappointed if it doesn’t happen. And if it doesn’t come, we’re going to have an ugly September 19th.
So would you say that – at this point, ahead of this meeting – to hold your horses if you’re looking to invest new money? How would you advise?
I would be inclined to do that. I really want to see that next card dealt. Because it really strikes me as an asymmetric risk. If they do cut, seeing as it’s already priced-in, the Dow might be up 50, 60 points. If it doesn’t cut, it could be another one of these down 300 days.
Actually, if we don’t get that cut and the market tumbles, that could end up being a pretty good buying opportunity. And there’s still an awful lot of economic strength around the world. And some of the industrials companies, particularly aerospace – Boeing (NYSE: BA) is absolutely booming.
Which is good for Boeing, but it’s also good for a broad range of suppliers. You’ve got three other companies in the Dow Industrials that are major suppliers to Boeing: GE (NYSE: GE) and United Technologies (NYSE: UTX) both supply the engines, and Honeywell (NYSE: HON) supplies the cockpit and the avionics.
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