How the markets could react to latest Fed meeting

A trader works on the floor of the New York Stock Exchange on April 25, 2012 in New York City.

Jeremy Hobson: The Federal Reserve wraps up a meeting today in Washington. And the expectation is that policymakers will launch more monetary stimulus to boost the economy.

For more, let's bring in Josh Brown of Fusion Analytics. He's with us live as he is every Wednesday. Good morning.

Josh Brown: Hey Jeremy.

Hobson: What are you expecting from the Fed today?

Brown: What I expect is probably not that important, but I'll give you an idea as to what the consensus thinks: about 63 percent of market economists that the Wall Street Journal surveyed don't expect any action, in terms of a major stimulus. And only 43 percent are looking for what they call a "lesser" action, like an extension of the current program, which is called Operation Twist. There are a handful of firms that are looking for something more; Goldman Sachs and Morgan Stanley have both said there's a 75 percent probability of big action. So, that's what the Street is looking for.

Hobson: All right, well, that's what the Street's looking for -- What should main street be expecting in terms of an effect if the Fed does extend its current programs?

Brown: So that's really the whole thing: I don't think that Main Street should have any expectations one way or the other, because frankly, we're at zero percent interest rates... mortgage rates are at 4 percent. I mean, there's very little that the Fed can do with these levels to have an impact in the average person's life. A lot of this is more about psychology; a lot of this is more about the flow of money, etc.

I think that the main issue here -- and what could drive the Fed to act -- is the fact that financial conditions are tightening a little bit. We've ground to a halt in manufacturing. And Bernanke himself has said that if we don't get a stronger GDP growth rate this year than last year, unemployment will start to rise again. And clearly, we do not have a stronger GDP growth environement this year than we did last year.

Hobson: Josh Brown of Fusion Analytics, thanks as always.

Brown: Thank you.

About the author

Josh Brown is a New York City-based financial adviser at Fusion Analytics.

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