Will the Fed Move This Week - and what should investors do?

Can the economy deal with a Federal Reserve interest rate hike at this week's Federal Open Market Committee meeting?Yes,the economy can support an 0.25% increase,but we don't think there will be one,Andrew Burkly of Oppenheimer&Co. told CNBC.To me,the risk is essentially longer,not sooner.We're leaning more to a rate increase in the latter part of the year.The sector I like for investing in from all this is the financials.*
The options market suggests that this week's FOMC meeting could be potentially one of the most volatile that we've seen in years,added Stacy Gilbert of Susquehanna Capital Group.We have seen an increase in what I call "crash protection,"and we haven't seen this increase of crash protection over the last couple of years.This is one of the biggest increases that we've seen.
The S&P 500 options are pricing in a stock market move of about 2.25% for a one day move,which prior to the past couple of weeks would have been a notable move in the S&P 500,and something that we haven't seen relative to the Fed in quite a while.So I think there's a lot of uncertainty out there.The markets are pricing this in as a notable event,and portfolio managers and investors are looking at their portfolios saying "What if?I want to be able to sleep at night."*
The Fed's decision will be released on Thursday.Whenever the rate increase comes,it will be the first one since 2006.The US economics team at Morgan Stanley thinks a hawkish pass by the Fed is a 60% probability.In other words,the Fed would pass on a September rate liftoff,citing the recent tightening in financial conditions;while leaving open the possibility of an increase at the October or December FOMC meetings.*
Morgan Stanley (MS),Oppenheimer Holdings Inc (OPY),Susquehanna Bancshares Inc (SUSQ)