This sets up a dangerous precedent for Bernanke, and it reinforces my suspicions that he's another Greenspan clone. August 17. December 12. Now January 22. Those were all surprise moves to either cut the discount/Fed funds rate, or introduce TAF. That's 3 surprise moves in less than 6 months. He's setting up dangerous expectations on Wall Street where the markets will be rescued anytime we get a big selloff. With the FOMC meeting just 1 week away, he blew it. He couldn't hold his load and just splattered it all over his banker friends. Market was very oversold so we'll probably rally till FOMC and maybe another few days after, but then we'll get another huge selloff where everyone will beg for another intermeeting rate cut. This is very similar to 2001.
What do you expect? Get real man, the FED will not just sit on their hands and let this do what it should on its own. Anyone with half a brain knows it is futile, but they must act or face the noose from the public for doing nothing at all. Embrace the fact and use it to your advantage.
History repeats! I agree that this rally is rate driven only...remember the last cut? Market screamed FOUL!...was sharply up only to collapse soon after. The smart money is selling the rallies, because its a bear market. Incredible blood bath in Asia overnight. I dout that the 75bp will solve this dilemma. I read that trillions have been lost...then again, doesn't this just get recycled to the winners? Last February, I bought when the market tanked, and was later shaken out as we had a lower double bottom.
Ben 'Nanke seems to be always several steps behind the market. He's now become the market's slave. When the market whines, 'Nanke reacts.
We are oversold so this rally will last for at least till FOMC meeting. A bear market that just gets started usually has its sharpest rallies at the beginning. I expect this to be a rally that will test the will of those that shorted today or before the FOMC meeting.
An often quoted platitude that is an absolutely worthless piece of investment advice. So when the market rallies on rate hikes, as it has often done in the past 10 years, yet falls on rate cuts, where does that leave you and your favorite quote?
this is a rare occasion that i actually agree with what the fed did even though the action could backfire and fail (which would only add to the panic), he had to do what he could to make the market hold at what should be 'bear phase one', ie the may 2006 highs below that, in the first 'wave', is really uncharted territory, arguably an uncontrolled crash