Will he, or won't he? And if so, by how much? The answers to those questions will largely determine whether September lives up to its billing as the worst month of the year for the stock market.
The thinking right now on Wall Street is that Fed Chairman Ben Bernanke will deliver a rate cut at next Tuesday's meeting — at least a quarter point. It would be Bernanke's first rate cut in his 18-month tenure — and there is no shortage of critics who believe it is not soon enough.
Indeed, it's been painful for investors to watch Bernanke of late. Hamlet-like, he’s tried to navigate the sub-prime terrain. Clearly the former Princeton professor is trying to make a clean break from the Greenspan tradition of never finding a crisis that didn't deserve a rate cut. And with no textbook to guide him, Bernanke has surely had a tough sophomore year as the Fed.
Earlier this month, Bernanke went out of his way to warn that, "It is not the responsibility of the Federal Reserve ... to protect lenders and investors from the consequences of their financial decisions." But, Bernanke now finds himself with his back to the wall. On Friday, with news that the jobs market was actually contracting this summer, bearish investors were right to conclude that the Central Bank was seriously behind the curve.
Even former Fed chief Alan Greenspan has been giving his successor a nudge. The maestro is now warning that the market mayhem of the last seven weeks was eerily reminiscent of the days leading up to the panic of 1907 and the stock market crash of 1987. Prudently, he left out any comparisons to the crash of 1929.
But the message to Bernanke was none to subtle.
Yes, rates will fall along with the autumn leaves. And, because Bernanke has waited so long to cut, they will probably fall further and faster than most investors expect.
But Greenspan's message was all too clear. Were he still at the Fed, the maestro would have already have used his scissors, and would now be sharpening them for another rate cut.
Terry Keenan is the anchor of "Cashin' In" and is a FOX News Channel business correspondent. Tune in Saturdays at 11:30 am ET, and find out what you need to know to make your money grow and keep what you already have!