Well, by now the 25 basis point rate cut is old news. It’s interesting to see the mixed reaction to the cut; some say it wasn’t enough and that The Street was expecting 50 points, others say that the Fed should quit trying to save the economy from recession and let the free market play out.

A few highlights:

This Fed continues to display their cluelessness. They will definitely have to cut more times, so just GET IT OVER WITH now. Silly Fed. -Jordan, In The Money

What is the right number for interest rates? 4%? 3%? 2%? No one knows for sure, and that’s the problem. Investors are becoming like Pavlov’s dogs, frothing at the mouth at the mere thought of an interest rate cut. Once the Fed accedes to their wishes, they are satisfied for a while but wind up wanting more and more cuts.

As today’s market action shows, these people are never going to be satisfied. -Jonathan Burr, Blogging Stocks

The Corner Office Take

In my opinion, Bernanke should have left the interest rates alone. The Fed doesn’t make an economy, and it can only soften the edges of the peaks and valleys.

My Emigrant Direct account will probably take a hit, and the threat of a recession is growing rapidly, thereby taking the attractiveness out of the stock market.

If you can’t make money at a bank, and you don’t want to throw all your money into the stock market, where shalt thou stash thy cash?

Economics, Finance Fed rate cut, FOMC, interest rate, rates

Yesterday crude oil settled in above $93 per barrel on production problems in Mexico and a weaker dollar.
Pemex, of Mexico, took 600,000 barrels a day off line due to weather. Most of the problem stems from ports being closed, as they are unable to export any more crude and have run out of storage.

The lost production will likely be made up quickly, but it will certainly draw on U.S. inventory levels in the coming weeks, which should further support prices. Crude is up 10% since Wednesday, when the DOE said in its weekly inventory report that stockpiles fell, contrary to analysts’ expectations for a build.

On Wednesday, the Fed may announce a rate cut by a quarter percentage point, which would be negative for the dollar and is seen as positive for crude oil demand. A bigger-than-expected cut would send prices soaring higher, while no cut at all would likely cause a sell-off.

Evidently it is widely accepted that the Fed will cut rates by a quarter point, which I think is ridiculous at this juncture. I don’t see an additional rate reduction helping the current housing market, and it certainly won’t create more jobs overnight.

I’d love to see the Fed hold the rate at 4.75% and wait until we see how the last reduction has affected consumer spending before chopping the rate further.

Economics, Finance, Oil & Gas crude oil, dollar, Fed rate cut, interest rates, rates