I was on a plane for most of the day so I just got a review of the action.
From my first post in this thread: “I hope you’re right [the market declines big]. I just fear candy and cake (re: “surprise” rate cut) from Uncle Ben.”
Well, just as I suspected. Uncle Ben hands out more candy because God forbid anyone should lose some money or we should have a recession. Now, both of those things are going to happen going forward anyway, but at least the kiddies can pretend for another month that they won’t.
I actually thought the “surprise” cut would come tomorrow (Wednesday), after the market tanked 5% or so today. I thought maybe, just maybe, that Ben would think, “Let the children suffer just a little bit to remind them that bad things can happen sometimes.” But no. Too much to ask.
Given the 75 bps rate cut I’m actually surprised that we didn’t close in positive territory today. After all, I believe that this is the first time in the history of the Fed that (a) rates have been cut by more than 50 bps at one time, and (b) that an intra-meeting rate cut has been greater than 50 bps. It surprises me that that didn’t get the kids more hot and bothered – today’s market close was a Bronx Cheer. In my view, it shows how serious the problems are.
Shoes that will be dropping over the next 6-12 months that are not fully priced into stocks include: (1) Problems in Credit Card Land, (2) Problems in Commercial Real Estate Land, (3) Problems in Leveraged Lending Land, and (4) Recession, with all that implies. But at least we’re moving in the right direction.
