The reason this surprise discount rate cut and also new lending line with lax collateral isn't sparking a rally is because everyone saw this coming. Who is dumb enough to short ahead of another Fed intervention? The shorts were scared to death of another possible Bernanke announcement leading to a quick short squeeze like last Tuesday so most shorts covered ahead of the weekend, and even some longs got bold and bought ahead of a possible positive announcement from the Fed and/or Bear/JPM merger. Bernanke is now in panic mode, not that he's ever been the face of calm. He is now officially a slave to the stock market's wants and whims. The good news from this weakness is that it will begin the capitulation phase. Investors will now realize that Fed bailouts aren't going to save this dog and will bail out of stocks. This might put in a meaningful bottom, but only if there is a significant sell off. I am not talking 2%. 5-6% down in a day, something we haven't seen in quite a while. If more bottom callers come in like on Friday, and try to rally it on Monday, all bets are off and we get drips lower followed by quick short squeezes followed by more pain. Got the popcorn ready for Monday's massacre, should be quite a scene.
Bernanke is like Homer Simpson in the power plant control room. Just assume he'll hit the biggest red button when an alarm goes off.
I am not surprised ONE IOTA if I wake up in about 6-7 hours and this asshole cuts tomorrow morning in the face of the falling dollar. Not surprised by 100bps and even not surprised to see rates at 0% next quarter. Even some guy on Bloomberg just said that. There will be VERY good trades coming. We all want full capitulation to get long. Lets hope its tomorrow and the FED holds off so the blood is everywhere.
We are heading towards 0% interest rates, at this rate, we'll hit it by summertime. Bernanke's wet dream fantasies have all been about hosing down the US with dollars to prevent in his mind a potential Great Depression. I expect many surprise intermeeting cuts over his tenure, whenever the stock futures are down big or whenever Wall Street whines enough.