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This is an incredibly bearish signal. The Fed essentially turned its biggest lever all the way, and there's little left in their toolbox. One can only speculate

This is an incredibly bearish signal. The Fed essentially turned its biggest lever all the way, and there's little left in their toolbox. One can only speculate as to why they're panicking like this, but my guess is that it's largely political. The next big thing would be for the Fed to start buying stocks directly, probably through ETFs, which is something it currently can't do. At the moment it can only buy mortgage backed securities and bonds.

brianpgordon 7y ago
The Fed's move to cut to zero has been expected by everybody over the last few sessions. This is not new information. As for why they're doing this, well, monetary stimulus is really all the Fed can do, ineffective as it is, and in the vacuum of fiscal intervention from Washington I guess they feel that someone has to do something. By cutting all the way to zero they also put the ball in the government's/congress's court so the focus is on their inaction, where it should be.
- grandridge 7y ago
  As an emergency on a Sunday is a huge deal. It's a gigantic panic button that was just pressed
  - foota 7y ago
    Maybe they wanted time for it to settle in before markets open?
alasdair_ 7y ago
> my guess is that it's largely political. Trump made a HUGE deal of being “so surprised” that the announcement by the fed was made just a few minutes into his live press conference. He kept saying over and over that he had no idea this was going to be announced at such an opportune time. Of course it’s political.
anonu 7y ago
Not really bearish. More like a president who has undue and unprecedented influence over the Federal reserve and happens to be in an election year.
- Reedx 7y ago
  Fortunately it doesn't work that way and Presidents don't have that level of control. If they did, it would've gone to zero a long time ago.
  - anonu 7y ago
    You don't think Trump's bully pulpit is enough to steer the fed in the direction he desires? For the downvoters: feel free. You're just ignoring the new reality. I'm not a supporter of this administration. But I'm a realist.
  - deleted 7y ago
    [deleted]
lordnacho 7y ago
> The next big thing would be for the Fed to start buying stocks directly There's a ZeroHedge article that says this would require Congress. Is that true?
- brenden2 7y ago
  Indeed, it would require congressional approval. That's likely the only reason it hasn't happened yet. FWIW, there is precedent for this. The Bank of Japan owns something like 70% of all stocks in Japan via ETFs.

brianpgordon 7y ago

The Fed's move to cut to zero has been expected by everybody over the last few sessions. This is not new information. As for why they're doing this, well, monetary stimulus is really all the Fed can do, ineffective as it is, and in the vacuum of fiscal intervention from Washington I guess they feel that someone has to do something. By cutting all the way to zero they also put the ball in the government's/congress's court so the focus is on their inaction, where it should be.

grandridge 7y ago
As an emergency on a Sunday is a huge deal. It's a gigantic panic button that was just pressed
- foota 7y ago
  Maybe they wanted time for it to settle in before markets open?

alasdair_ 7y ago

> my guess is that it's largely political. Trump made a HUGE deal of being “so surprised” that the announcement by the fed was made just a few minutes into his live press conference. He kept saying over and over that he had no idea this was going to be announced at such an opportune time. Of course it’s political.

anonu 7y ago

Not really bearish. More like a president who has undue and unprecedented influence over the Federal reserve and happens to be in an election year.

Reedx 7y ago
Fortunately it doesn't work that way and Presidents don't have that level of control. If they did, it would've gone to zero a long time ago.
- anonu 7y ago
  You don't think Trump's bully pulpit is enough to steer the fed in the direction he desires? For the downvoters: feel free. You're just ignoring the new reality. I'm not a supporter of this administration. But I'm a realist.
- deleted 7y ago
  [deleted]

lordnacho 7y ago

> The next big thing would be for the Fed to start buying stocks directly There's a ZeroHedge article that says this would require Congress. Is that true?

brenden2 7y ago
Indeed, it would require congressional approval. That's likely the only reason it hasn't happened yet. FWIW, there is precedent for this. The Bank of Japan owns something like 70% of all stocks in Japan via ETFs.