Michael Gracie

Sticking to hard data, this morning’s Fed Funds rate cut of 75 basis points was the deepest on record. Who’s record? The Feds own record, dating back to 1971.

Note that there are several occasions where the Fed raised rates (either the discount or fed funds) by 3/4 of one percent: the summer of ‘73, September of 1980, and November of ‘94. But they never lowered it so significantly in one kick.

The Dow recovered roughly 2/3rds of its opening losses, ending the day down 128.11. I can’t remember such a harsh reaction on the part of equities to a rate CUT. It was hardly graceful.

It looks good on paper.

The Fed lowered rates 75 bips, and as you might guess the banking stocks rallied soon thereafter. It makes perfect sense - they’re getting cheaper money, which is supposed to help margins.

Hours later there’s another move afoot - “emergency” prime rate reductions. Both M & T and National City have cut their prime lending rate by the same 75 basis points (and they are making good use of the PR channels in the effort as well).

Will consumers just start borrowing again in droves? Likely not. But, as a gargantuan pile of mortages ready to reset this spring, banks might just stave off an ever-increasing wave of foreclosures. Of course, the circumstances may add more fuel to the fire: banks are charging greater-than-nominal fees to renegotiate loans, and many of them are tacking those fees onto loans; they’re doing a whole lot of “driveby” appraisals too, meaning they’re throwing darts when determining the value of their collateral. And don’t forget - they are coughing up the free money they just received from the Fed while they’re doing it.

It’s a precarious fix, but it may just work. At least for a quarter or two.

The Economist calls the latest move desperation. With only a week to go until the next meeting, a 75 bip cut might make an investor think the Fed knows plenty they don’t.

UPDATE: It’s funny that oil for March delivery had punched 7-week lows when the Fed made the announcement - I’m not sure how long that will last now. You’d almost think the Fed wants $5 a gallon gas.

Dow futures were off 500. The Federal Reserve Bank decided this was unacceptable, and cut rates 75 basis points.

Barry Ritholtz’s crew calls the Fed the “Plunge Protection Team.” There is little doubt now that the “PPT” surely exists.

My call for the next asset bubble? Bread. Buy now.

As an aside, Donald Luskin of Smart Money proves some financial journalists don’t have anything intelligent to say. To propose that “bears” caused a panic that made individual investors run for cover is simply idiotic (h/t to Paul Kedrosky). “Bears” didn’t make anyone borrow money they couldn’t pay back (which is the primary cause of the present situation). Second, most individual investors likely have not gotten out yet - in fact they are probably still listening to folks like UBS.

UPDATE: The Fed move had not, as of 9:00 am, had it’s intended effect. S&P futures were trading down 60 and change versus fair value, essentially unchanged from from the 4.25% Fed Funds rate world. NASDAQ futures much the same - off roughly 84. Now we get $5 a loaf bread AND decimated equity markets. Maybe the Fed was taking cues from Larry Kudlow.

UPDATE 2: B of A is another recommending buying stocks during the panic. That of course comes after they just announced a 4th quarter hammering - net profit down 95%. This is reminiscent of the earlier part of the decade, when banks were making recommendations in the face of egregious fundamentals - and we all know how that one turned out…everyone lost their shirts, and then sued.

Because some of the employees behind it seem delirious.

My monitor is an Apple Cinema HD 23”. It’s on the fritz - when I try to wake it up in the morning (or after any downtime more than a few hours) it takes anywhere from several minutes to several hours to turn back on. It isn’t just the backlight - when it’s dead, USB and Firewire ports are inoperable, and even the power switch fails to react. Sometimes the caps lock light on the keyboard (attached to the USB in said monitor) blinks while the monitor is black. It’s got a lot of AppleCare warranty left on it, but I’m not sure that really matters.

I’ve called the service/support line several times. They moved me to a product specialist in each case, and we carefully outlined troubleshooting steps. They ruled out any trouble with the MacBook Pro it’s generally attached to, and a visit to one of Apple’s Genius Bars was the latest suggestion.

As it turns out, my visit to the Apple Store in Cherry Creek turned out to be a sheer and utter waste of time.

Some highlights:

- The kid helping me, Travis, was quick to point out that waiting around for a $900 monitor’s backlight to come on was pretty normal. Sure it is, kid. Either he’s staring at ten year old Compaq monochomes while playing Doom(-1) in his parents’ basement, or he was just exercising his “genius.” Likely the latter.

- The kid also noted that I couldn’t possibly “be trying to scam him out of a new monitor.” Nice. All I could think to myself was why the hell anyone would want to get a new monitor, of the exact same model, if their’s worked perfectly fine? Apple hasn’t updated these monitors in years and if someone has AppleCare there is a pretty good chance they’ve got more warranty left than they’d get with a new one. Maybe the kid was just being a “genius.” As an added point, this particular monitor is completely free of dead pixels and has only minor ghosting/bleeding, not something many owners of similar equipment can brag about (read the Apple reviews to find out more). Why would I want to give that up? Thanks…I wouldn’t.

- Also behind the Genius Bar was another gent, a bit older fellow named Craig, that was listening in on the conversation. When the kid asked him what he thought, this yabbo starts into a tirade, directed at me, about how if they couldn’t replicate the problem exactly as described they would be wasting their time and money shipping it back and forth for repair. Thanks. I guess I was already wasting my time packing the monitor up in it’s factory case, driving to the mall, hauling up two flights of stairs and into the Apple Store. And along with the Macbook Pro I was told by customer care to bring along, just in case. I was left wondering what kind of “genius” would blather in such a way to an existing customer who just hauled in equipment he’d paid roughly $4,000 for. Instantaneous answer - someone behind the Genius Bar.

Let’s note…the customer care people rocked, laying out plenty of troubleshooting ideas which we tried day after day. Their solution of last resort was visiting the store, and only because they knew I wasn’t interesting in waiting weeks for a resolution. Also, the phone folks were pretty specific - I should note my case number when I brought the equipment in so the people helping me could review the related case notes first. I asked the kid three times…”you need the case number?” He said no, twice, and then noted on the last inquiry that they could get the case notes via the serial number of the monitor. Of course, the Genius Bar Work Authorization had no “steps to reproduce” printed on it, and I left the store fairly certain that I’ll soon be back to square one.

And sure enough I was right. Apple called me just before closing the following day to tell me my monitor was ready for pickup. I ran down there only to find them claiming they couldn’t replicate the problem. Right. A quick discussion with ol’ Craig, who babbled incessantly about all the unsuccessful troubleshooting steps they had performed, uncovered the following:

- The geniuses plugged the monitor into a MacPro, not a MacBook Pro. Call me crazy, but one could surmise the two machines have different video cards. Someone who is completely insane might also think that MacPros and MacBook Pros behave different when a Cinema display is plugged into them, particular in laptop dual-video mode (seeing as MacPros don’t operated in laptop dual-video modes because they…uh…aren’t laptops).

- The geniuses stated they could not provide documentation of the troubleshooting steps performed, because they didn’t actually document the steps.

- The geniuses stated that they never looked up the case number customer care told me to give them. They said they produced a new case number when items come in - so much for continuity in troubleshooting.

- Master genius Craig was beligerent as ever, yapping (again) in no uncertain terms that if I couldn’t document the precise steps required to produce the problem, then there was nothing they could do. This of course came out of his trap after the grand admission that they didn’t review the existing case, and didn’t plug the display into a relevant machine. So much for precise troubleshooting.

I leave you with a lovely picture of my dead display. I’m not worried - it’ll come on sometime soon, as in maybe when I get back from lunch actually dinner (as the photo was taken immediately after returning from lunch - and the display did turn on again, roughly five minutes after awakening the laptop).

UPDATE: A few days later, I get a chance to call customer care again. They are once again quite helpful - the senior support person I talked with says this issue screams of “power board failure,” and the display is now on it’s way to repair.

UPDATE 2: The display came back - two parts wound up being replaced. All seems good again. As for the “genius” bar visit - confirmed - a sheer and utter waste of time.

UPDATE 3: But…I spoke too soon. Same problem still exists (and a problem that doesn’t exist with another monitor in its place). I now suspect it’s a power supply issue.

LAST UPDATE: Called customer care. Again. They sent a new power adapter. Plugged it in, and sent the old one back. Five days running, no problem. To think, Apple spent roughly three hours on the phone with me, sent me to the dummy bar, shipped me a box, paid for shipping out and back, and replaced two parts, with no resolution. Then, a stupid little white brick of a power adapter turns out to be the problem. I’ll bet they spent $650 to satisfy the warranty service on a monitor that retails for $900, when they could have just started with the most obvious issue…a power issue. I’m grateful it’s over, but there’s a bigger point at hand - I’d venture to guess that as Apple gains popularity, linearly, their warranty service issues are going to grow, multiplicatively (if not exponentially).

HouseValues, for investing in ActiveRain. ActiveRain has been dubbed the “LinkedIn” for real estate agents, while HouseValues purports to tell you what price you should sell your home at. Real estate agents networking? House values?

Me thinks the investor has lost, twice.

UPDATE: People are still hitting the real estate sector with new ideas. While many will be the victims of bad timing, still others may wind up disenfranchising the traditional broker channels when (and if) things turnaround.

When I first read the headline, I thought fair enough - if Bank of America backs out they should pay a breakup fee.

But alas, it’s Countrywide that will be doing the paying.

Potentially scary for the troubled mortage lender. While we don’t have full details, you might expect to see some type of minimum net asset clause and/or litigation contingencies in the deal sheet, meaning if Countrywide happened to have more skeletons in the closet they would wind up paying for it.

UPDATE: The Wall Street Journal agrees, and also notes that Countrywide stock price reflects a decent amount of skepticism.

Not politics…just facts.

Nancy Pelosi announced today that Congress will be presenting an economic stimulus package early next week.

The S&P 500 Index reacted by shedding almost 40 points (and the Dow was down a cool 307). Maybe Pelosi & Company should stick to stimulating the gourmet food in the House cafeteria?

UPDATE: The markets didn’t like the Administration’s response either. All most people are going to do with $800 is pay their gas and electric bills.

UPDATE 2: Paul Kedrosky calls the Bush Administration response “rushed” and “panicky”.