Wednesday, October 31, 2007

Fed cuts interest rates by .25%

The Fed just announced that they have lowered the interest rate .25% to 4.5%. The Dow was up nearly 70 points before the announcement and is now trading almost flat. It is always interesting to see how the market is going to react to interest rate activity. A lower interest rate allows investors to invest more on margin and pay lower interest expense. This is a great thing for investors, but the flip side is the reason the Fed is lowering interest rates is due to the economy as a whole (including credit markets, ie housing). The real test will come in a few days when the beige book comes out and we see what the Fed was discussing during the past 48 hours. The Fed notes will give us a better look into where the Fed sees the economy going.

I have a standing limit order on Chipotle to sell a few shares, although it does not look like it will hit the number. I still like Chipotle, but I am up over 10% in less than two weeks. It may be time.

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