Fed Cuts Rates, Stocks Surge
The waiting is over…the Federal Reserve lowered interest
rates by 50bp, the first cut since 2003. The move was somewhat
surprising, especially considering recent public pronouncements by
Ben Bernanke, the Fed Chairman. Both the Federal Funds and
Discount Rate were lowered by 50bp, the discount rate was lowered
by 50bp last month too.
Stocks surged shortly after the decision but the U.S. peso, I
mean dollar, fell to a record low versus the euro and a 30-year
low versus the Canadian dollar. Meanwhile, the U.S. Dollar Index
sunk to its lowest level since 1992.
Crude oil prices also jumped on the news, climbing above $82 a
barrel, before settling at $81.90.
In earnings news, Lehman Brothers
(
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PowerRating) reported
better-than-expected numbers, although what most commentators fail
to point out is that the numbers were slashed in the wake of the
recent turmoil in the credit markets.
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