The Fed's action today to cut the FFR% by 75 bp to 3.50%
was intended to curtail a global meltdown in stocks and
lower quality bonds.
The Fed has remained stingy on the liquidity front. Fed
bank credit is up only 3.2% yr/yr through last week even
with its TAF. It is hard to stimulate an economy with
Fed credit actually down in real terms. Let's see the
liquidity situation this Thurs. in the wake of the cuts.
The cut in the FFR% cements the screwing of the saver and
is a negative for US dollar holders.
The stock market did bounce on the news, but so did the oil
price. Overnight, oil traded at $86.11 a bl. There were prints
above $90 in late day trading. A stock rally that brings
stronger oil and commodities prices will simply punish
consumers further.
I am taking tomorrow off. Be back Thursday.
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