Tuesday, December 11, 2007

Fed cuts rate; Wall St cuts wrists

The Fed cut the FFR by 0.25% to 4.25% this afternoon. The markets were predicting a 25bp cut today, yet there was some bad news that came through the bast few days, and some were speculating that the fed might make a bigger move. They didn't and the Dow sold off by about 300 points.

Ouch.

The market got a cut, but it wasn't big enough so they freaked. In fact, the market tanked immediately on the news. See it here:Now that's some cliff diving! The interesting thing is that the trend stayed down after the plunge. The Bulls on Wall St. didn't like the news, and I think the mood has turned sour. It will be very interesting to see what the international markets do overnight. I think we'll see a big sell off in Asia and a smaller one in Europe.

But it will be especially interesting to see how the central banks in the Mid East react to this cut. There is serious worry that some oil countries will unpeg from the dollar. I think they will hold for now; after all the cut could have been worse. Imagine what would happen if it was 50 bp, or god forbid 75 bp?

This will be interesting to watch over the next few days. If I see anything major or any good commentary, I'll be sure to post it.

As always, The comments herein reflect personal opinions about the markets. Under no circumstances does this information represent a recommendation to buy or sell securities.

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