Now the cycle starts all over again: What will the Fed do when it meets again in six weeks? No doubt, it’ll cut again…and again after that (unless it does some big cut next time.) By cutting just a quarter of a percent, the Fed showed a sense of responsibility (waiting to see how the consumer really holds up this holiday season) but also gave a sign that it is not kowtowing to Wall Street.
Judging by stock action in the wake of the latest cut, Wall Street wants it both ways: A big rate cut and a healthy economy. Ain’t gonna happen.
What is going to happen is that, as the economy sinks deeper toward the red, more cuts will follow. The market will gyrate wildly on the speculation. And life, as we know it, will go on.
Over and out.