It's been humorous to hear the likes of Larry Kudlow and Ben Stein (since when did this guy become a market expert? Didn't he write speeches for Tricky Dick Nixon and play an Economics professor in Ferris Bueller's Day Off?) blast away at Ben "Helicopter" Bernanke for being to tight with his monetary policy. Bernanke has now caved on every occassion. I had friendly bets with a number of friends after yesterday's close here in London that he would do an emergency rate cut before this morning's opening in New York. He did. EZ-money!! I wish betting futball was this easy. This was first emergency rate cut since Greenspan's more obvious slash prior to the first day of trading following the 9/11 terrorist attacks. I'd be remiss if I didn't remind readers that stocks continued to get thrashed for another 18-months following that rate cut--which was followed by even more rate cuts all the way to an eventual 1-percent Fed funds rate. That episode was meant to save us from a crashing technology and dot-com bubble. This rush to free money is in hopes to save us from an even more ominous and far more dangerous mortgage/real estate/derivatives/hedge fund/private equity bubble. I would place the probability that today's not-so-surprising Fed rate cut also happened to cooincide with a low in stock prices at somewhere near zero chance. Even as panic among retail investors was palpable (according to some friends that manage money for retail clients), the institutional side saw today as nothing but a great buying opportunity. I listened to CNBC US in the afternoon here in my London office as one by one, nearly every commentator tried to sooth viewer angst, "This is normal and healthy and we've gotten through much worse in the past," they said. Folks, if you take any advice from CNBC, your totally doomed. These folks are pretty much clueless.
So as Ben Bernanke was throwing bails of hundreds out of his helicopter, stock futures in the U.S. were nearly at their lows by the time markets opened in the U.S. I told a colleague that I had never seen such a muted response to a supposedly blunt tool. Although stock indexes in the U.S. closed not to far from their highs on the day, the last time stocks closed lower on the same day of a Fed rate cut was that day in September 2001. Of course, Ben Bernanke and his other impotent FOMC members did not want to have to cut prior to its meeting next week. The fact that they could not hold out for another 6-trading days is indicative of sheer desperation. The Fed just sunk a couple more precious bullets into this unwieldy beast and the beast did not go down. We're in deep.
So as Ben Bernanke was throwing bails of hundreds out of his helicopter, stock futures in the U.S. were nearly at their lows by the time markets opened in the U.S. I told a colleague that I had never seen such a muted response to a supposedly blunt tool. Although stock indexes in the U.S. closed not to far from their highs on the day, the last time stocks closed lower on the same day of a Fed rate cut was that day in September 2001. Of course, Ben Bernanke and his other impotent FOMC members did not want to have to cut prior to its meeting next week. The fact that they could not hold out for another 6-trading days is indicative of sheer desperation. The Fed just sunk a couple more precious bullets into this unwieldy beast and the beast did not go down. We're in deep.
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