Fed moves early

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.

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