Your Money At 2pm, Wednesday


The Federal Open Market Committee of the Federal Reserve began, Tuesday, one of their eight regularly scheduled meetings a year in Washington.

But just what are they talking about?

The Federal Reserve's job is to keep the economy functioning in an orderly manner. That means keeping inflation tame and resolving unfixable bottlenecks in the banking system like we saw this past August. It does that by controlling the so-called money supply through two key interest rates.

The discount rate: what the Fed charges banks to borrow from it and the Fed funds rate. That’s the rate at which major banks such as Citigroup and Bank of America borrow from each other.

Notably absent from the Fed's mandate, the performance of the U.S. stock market, which should merely be a reflection of the strength of the U.S.economy.

Now the question is - will investors look in the mirror Wednesday and like what they see?

Deutsche Bank Chief Fixed Income Economist Joseph LaVorgna joins the panel for this conversation. Following are excerpts.

LaVorgna expects the Fed to cut interest rates by 25 basis points. Core inflation is under 2%, he says, the Fed isn't taking much risk by cutting by 25 basis points.

In the event of a rate cut, LaVorgna thinks industrial stocks are the trade – as the equities most likely benefit.

S&P 500

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Trader disclosure: On Oct 30, 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders; Macke Owns (YHOO), (ATVI), (INTC); Najarian Owns (C); Najarian Owns (BHI) Options, (BIDU) Options, (HAL) Options, (UA) Options, (YHOO) Options, (SNDK) Options, (GOOG) Options; Finerman's Firm Owns (TSO), (WMT), (MSFT), (YHOO); Finerman's Firm And Finerman Own (C), (GS), (HD), (TGT); Finerman's Firm Is Short (MER) And Owns (MER) Puts; Finerman's Firm Owns Russell 2000 Puts; Finerman's Firm Owns S&P 500 Puts