Fed cuts rate by 3/4pt. 1/22

Fed cuts rate by 3/4pt. 1/22

www.cnn.com

The Fed, confronted with recession fears, cut a key interest rate by three-quarters of a percentage point today.

(visit the link for the full news article)

money.cnn.com...

[edit on 22-1-2008 by Karlhungis]

Seems to be a pretty big cut. Now the question is how is the market going to react? I am guessing panic due to admission of recession.

I doubt this bandaid will have much effect.

money.cnn.com...
(visit the link for the full news article)

[edit on 22-1-2008 by Karlhungis]

If the market don't rally by the end of the day we are so screwed. The markets will crash around the world and it will be war.

Gools, Id love for you to post a decent thread on the realities behind the market today.

The US opens today, and I feel todays a day that is going to make of break the world economy.

Iv heard the term '' global economic meltdown '' thrown around alot today...


and I will be staying awake tonight to see how bad the US market opens.

Holy Moly, this is very bad news. The last time I read of a 3/4% Fed Rate cut, it was in a bad novel about the Fed by Dan Brown. Just doesn't happen.

There goes the dollar.

This is obviously a desperate attempt not to see the markets tank today after the long weekend and the European bloodletting, but this will only frighten investors even more.

This is very very bad news.

reply to post by Sky watcher


Yes, today should be very interesting. Are you thinking it will rebound? I think that even if it rebounds today, it will fall tomorrow. I will be surprised if this band aid would create anything greater than a single day rally.

Originally posted by gottago


This is obviously a desperate attempt not to see the markets tank today after the long weekend and the European bloodletting, but this will only frighten investors even more.

This is very very bad news.

I am with you. I realize that most investors aren't as negative as I am, but I fail to see how a reaction like this from the fed would be viewed as a good thing from large numbers of investors.

To me it is showing that the government is very concerned about this and if they are very concerned... we should be VERY concerned.

The crash of '87 was still a lot worse. The DOW lost as much as it has over the past few months in just a few days. So even if everything goes to poop I doubt the nukes will start to fly or anything.

Sorry for spamming my own thread but I have a question.

With the Fed cutting rates as low as they are now. If (when) this doesn't have the desired effect and the markets continue to drop, at what point will the fed ever be able to raise rates again without triggering more panic?

It seems they are painting themselves into the corner.

well, the Dow was set to open 500 points down so the cut is an attempt keep it from plunging further. The unfortunate aspect of this is that there was clearly a mess of panic yesterday around the globe and it is spilling into today's open.

If the past is any indication, we should drop, see a small recovery, another drop and then a nice rally at the end to keep us in comfortable territory. Remember, when folks are in panic mode there are always a few calm heads out there waiting to scoop up discounts.

Thus far the futures market is unimpressed....Right after the announcement Dow futures were only 210 down or whatever...Back to 380 down now...

Put it this way, the open is not going to be pretty by any stretch...Let's hope things improve over the course of the day...

Wednesday is the day folks...This will tell us how much of an effect the Fed cutting by 75 has had, and how long it might last for...

Peace

Well analysts are already spewing that this cut wasn't enough and it was a day late and dollar short..

Currently Dow Jones Futures is capitulating between 555 and 460 points
that is a 5% loss on open if this is correct.. I am not sure if this will kick the curbs into effect or if it has to fall farther for that to happen...

It will be an interesting ride to say the least...


Respectfully
GEO

reply to post by geocom


Cut not enough? Wow, how low do they want it? I kind of look at this as being so large that it will help to feed the panic. That seems to be the general effect it has had here at least.

As a result of the Fed cutting by 75, both London and Paris have slipped back into the red, after moving back to positive territory once the lunch break was over...

I don't like this, tho no doubt, they are waiting for Wall St to open...Frankfurt has done incredibly considering it was the most down of the indices and now is only 1% down...

Its the final countdown folks...22 mins to go !!!!

Originally posted by Karlhungis

but I fail to see how a reaction like this from the fed would be viewed as a good thing from large numbers of investors.

i think it has something to do with the accepted theory that for every 1/4 point drop in the banks' borrowing rate (from the Fed) translates to a potential Billion dollars for the bank... they arbitrage their loan rates from the private loans they lend out to customers & businesses.


there's hundreds of sizeable businesses that have (on paper) 'guaranteed loan agreements' that the businesses have not yet exercised,
and with the current backlog of tight credit those guaranteed loans have been put-on-hold for the past several months...


If the businesses want to stay solvent (because their company treasuries are extremely low due to the recent 2,000 + point drop in markets)
they need to exercise their loans, now.

the Fed is protecting the banker elite is the bottom line...
under the ruse of saving & stabelizing the economic engine of America..

To me it is showing that the government is very concerned about this and if they are very concerned...

The Federal Reserve is distinct from the government,
although the gov't is concerned too...as GWB last week announced he needed a Swift and Temporary, "Stimulus Package" from congress, Pronto!

the action taken today was by the Federal Reserve for the benefit of the member banks...not for the aid of the citizens & savers & creditors

I am not sure how low they want it to go but I think everyone who has said that it may not be good for the market is correct, we just had a big speech by Bernanke on Thursday or Friday and he did nothing then so now over the weekend the foreign markets tank and now he is saying whoops ..

It is a panic move by the fed and not a very well thought out one if they were going to lower rates they should have done it during the speech not let us think they were holding and then dumping the cut on us...it is hard to plan a portfolio when these surprises keep happening..


Respectfully
GEO

reply to post by geocom


For sure, Geo....

Unless you're in it for the long term and don't care about stuff like this (as I am), anyone who trades would be in cash almost 100% by now, unless they're into shorting...

For the average joe on his 401, don't sweat...If you have 10 or more years to retirement, as I do...No need to panic, stock markets always give the best return over the long haul, so sit tight, go to work, have fun on the weekend and don't sweat it

Peace

CAn someone please post a countdown website, or '' x hours until market opens ''

its hard to guage here in Aus just when it opens.

reply to post by Agit8dChop


Chop...

finance.yahoo.com...

Will tell you how long to go and, for Dow futures:

futures.tradingcharts.com...

Peace and enjoy the fireworks

reply to post by St Udio


That sounds so reasonable and reassuring.

But the 20 Sept. Fed cut of a 1/2 pt. was characterized in the msm financial pages as 'desperate.'

3/4 pts. is what then?

Really desperate?