These are comments from some of Wall Street's top money managers, investment strategists and economists, responding to our CNBC Econ-Recon Snap Survey. The survey was conducted for one hour immediately after the Federal Reserve's post-meeting announcement today that it is not making a change in interest rates.
Timothy Ghriskey, Solaris Asset Management: "It was as expected, but not as hoped for!"
Richard Sichel, Philadelphia Trust Co.: "Mr. Bernanke is allowing the system to sort things out at this point."
Michael Painchaud, Market Profile Theorems: "It reduces the probability that the sub-prime problems are going to significantly impact the economy as a whole in a meaningful way. The Fed is in possession of a significant volume of information to make this assessment."
Hugh Johnson, Johnson Illington Advisors: "The (initial) decline in the equity markets in response to the statement reflects the consensus view of investors that the Fed, although not dismissive, did not express a deep enough concern about changes in credit conditions and their impact on the economy going forward."
Richard DeKaser, National City University: "Aside from acknowledging recent financial market volatility, the statement was essentially unchanged. Hence, the Fed demonstrates stability, while at the same time signalling an attentiveness to market conditions."
Kurt Karl, Swiss Re: "Given the lack of liquidity in some markets and credit problems at large banks, I expected the Fed's statement to be more reassuring and drop the 'inflation concern.' Leaving the statement unchanged has increased the risk of recession."
Robert Froehlich, DWS Scudder: "The Fed is out of touch with reality and should be cutting rates right now!!!"
Bill Hummer, Wayne Hummer Investments: "It is commendable that the Fed did not validate the stupid lending decisions that created the mortgage mess. Neutrality is the right medicine for current ills."
Rob Morgan, Janney Montgomery Scott: "Every time a Fed rate hike cycle ends, the players who are over-leveraged eventually get washed out of the market. That is what we are witnessing now - not a credit crunch. It is tough to have a credit crunch when default rates are at record lows, leverage is low, and aggregate cash flow for deals (in general) covers the cost of borrowing. The Fed recognizes that we are not in a credit crunch and appropriately with today's statement showed that they are not taking their eyes off the inflation bogey."
Subodh Kumar, Subodh Kumar and Associates: "Central banks globally continue to focus on inflation. The Fed continues this stance in its FOMC. The next to watch is the Reserve Bank of Australia which may raise rates from 6.25% after its next meeting on Wednesday.The Fed acknowledged the issues but clearly is stating that it expects market solutions to credit issues-diminishing any expectations of a 'Greenspan put.' The equity corrective phase with high volatility likely continues but recession (or bear market) risk seems low. Quality of delivery and leadership of individual companies is likely to be the favored equity market factor."
Maury Harris, UBS: "UBS all year long consistently has expected Fed easing during 2007, and we still expect two 25 basis point fed funds rate cuts before year-end."
John Clarke, H.C. Wainwright & Co.: "The Fed is doing a good job monitoring inflation, voicing its concerns on inflation and bringing ease to the markets."
Jeffrey Kleintop: LPL Financial Services: "Today's statement was a disappointment for market participants. Yesterday's stock market rally was supported by the idea that the GSEs could provide some added liquidity to the mortgage market and investors were hoping that today the Fed would appear ready to provide added liquidity, as well. Over the last 20 years the Fed has cut rates at the meeting following the move to neutral (or weakness) from tightening (or inflation). Today's risk assessment paragraph was as close to neutral as they could get while still noting the risk to inflation remained the predominant concern - suggesting a rate cut is not likely at the next meeting.
Joseph LaVorgna, Deutsche Bank Securities: "The Fed is on indefinite hold but the risk is to the downside if growth disappoints and/or financial conditions tighten substantially further."
Ram Bhagavatula, Combinatorics Capital: "The Fed wants to see whether recent market turmoil is just that. If the economic numbers weaken further, especially payrolls, the FOMC has set itself up to be ready to act."