The markets got the cuts they wanted, but not the wording, which was not friendly to those who wanted a clearer signal that more rate cuts were coming:
1) The Fed said there was an equal balance between the inflation risk and risk to growth.
2) Hoenig dissented.
3) The Fed added they were still worried about inflation: "recent increases in energy and commodity prices, among other factors, may put renewed upward pressure on inflation."
All this signaled that another rate cut was not a slam-dunk. The weaker groups post-Fed are financials and consumer discretionary (retails auto, housing), as you would expect; these are the stocks that will be affected most by a U.S. slowdown.
Other sectors--like materials and technology, with broader exposure to the international economy--have already recovered.
Abraham Gulkowitz at Brookville summed up the global bull argument: "One can argue that enough data have now come in around the world to demonstrate the resilience in the world economy, even in the face of higher energy prices, the downturn in housing, and ongoing fallout from the summer's financial market turmoil."
Questions? Comments? firstname.lastname@example.org