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2006-06-28 :: Fed Meeting Looms Large

Tomorrow we have the announcement of the assumed interest rate increase coming from the Fed.  Right now, everyone anticipates that there will be a 0.25% increase in the Fed Funds Rate.  However, one of the catalysts yesterday was a rumor that the Fed would flex its muscles and raise by 0.50%.  Additionally, a number of economists have raised their targets for the Fed Funds Rate to 6% by late 2006 or early 2007.

We also saw a major sell off in tech stocks yesterday, with Marvell down 15% based upon a deal to purchase Intel’s cellular chip business.  Seems like an over-reaction to me, but based upon the negative action in the chip sector in quality companies like Marvell and Qualcomm, we are likely heading into some very rough seas for NASDAQ stocks.  We will be using NASDAQ stocks as a source of funds to extend our purchases of companies with growing earnings.

Everything will continue to be choppy until the Fed action becomes clear to the traders in New York.  We’ll just continue with our plan.

More later!

Mark