During the day Friday and in our reading over the weekend, we noticed a healthy degree of skepticism regarding the market's prospects following the Fed's cut in the Discount Rate.
Below we highlight some media commentary regarding the Fed's inter-meeting rate cut:
"But we're skeptical that the Fed's latest exercise in ease will have any lasting impact." - Barron's
"The Federal Reserve sure got a lot of bang for its buck...But after the initial rush of adrenaline, some strategists and investors remained cautious about whether this is the turning point for world stock markets, when they recover their poise and resume their upward march." WSJ
"The Federal Reserve's surprising decision to cut short-term interest rates late last week may have resuscitated bank stocks. But they're still short of breath...Even after the rate cut, the group of so-called money-center banks, whose shares are off 35% since July 1, face a likely slowdown in deals and trading next year. The Japanese banks are teetering, threatening the entire global finance system, while banks stand to lose a lot if Brazil's economic package, expected to be unveiled this week, doesn't go down well." - WSJ
"But it is still too early to know whether interest rate cuts will convince investors that high-grade corporate bonds are not so risky after all, or reassure banks that the business outlook is sufficiently bright that it is reasonable to provide new loans." NYT
"Wall Street's market strategists say there are a lot of ifs about whether yesterday's rate reduction will be enough to power the stock market to new highs. They see the cut as directed at averting a credit and liquidity crunch that could have sent the U.S. economy tumbling into recession. But a handful of leading strategists aren't convinced that ...it will entice nervous investors back into the markets for depressed junk and investment-grade bonds." - WSJ
What we failed to mention above, however, was that these quotes were not in reaction to Friday's inter-meeting rate cut. They were actually written in the days after the Fed's inter-meeting cut in October 1998.
Comments