When NYSE Euronext (NYX) Chief Executive Duncan Niederauer accepted the invitation to speak at today’s Potomac Officer’s Club event at the Ritz Carlton, he could hardly have imagined it would have been on the heels of this morning’s emergency 75 basis points rate cut by the Federal Reserve.
Knowing the increasing drumbeat of recessionary concerns was top of mind for the attendees, Niederauer addressed the rate cut – and the “R” word – head with some compelling insight that was immediately picked up by several major news outlets covering the POC event.
Niederauer expressed surprise not at the rate cut itself, but at its magnitude, indicating that many were anticipating a 50 basis point cut. He added that he is not seeing the signs of a recession that would typically precipitate this type of emergency move by the Fed.
Niederauer’s comments accurately reflect some conflicting signals from economists and policymakers on a) whether a recession has started or b) whether we are about to enter one. Much of the uncertainty stems from determining the extent to which the housing market woes will spill over into other segments. Niederauer acknowledges that the rate cut will help “a little” but wondered about the long term effects. At least in the immediate term, the cut prevented what was shaping up to be a historic bruising on Wall Street today with futures pointing to a potential 500-600 point drop.
Niederauer’s comments also potentially reflect what many observers have stated to be an evolving state of a “recession,” with many arguing that recent recessions have been milder than their predecessors – perhaps making the warning signs more subtle. As a result, consumers are left to balance the nightly mention of the “R” word on the news with analysis from experts such as Niederauer who has his finger on the pulse of current data and can effectively analyze what he is seeing.
While we will have to wait and see where the economy heads from here, I’m going to give a fellow Emory Eagle alum the benefit of the doubt.