Fed Rate Cut: Too Little, Too Late?

Asian markets had been getting pummeled for 2 days coming into this morning. Our futures were pointing to a very weak open for stocks here in the U.S. The the Fed announced that they were cutting the fed funds rate by 75 basis points to 3.50%.

The Fed said that the cut was needed due to a "weakening economic outlook and increasing downside risks to growth"? Well, duh. But we knew all this last week, so why wait until now.

The answer of course, is that the Fed wanted to head off a true panic in the markets. But they still show that they remain behind the curve. The market wanted 75 basis points weeks ago. The muted reaction in stocks today shows that if the Fed wanted to now get ahead of the curve, then they probably should have gone 100 basis points.

Oil and gold are lower today, and the 10-year yield has dropped to 3.55%. The volatility index topped 37.5, its highest level since October 2002, the nadir of the bear market.

The markets are bouncing as I write this, but there is still a lot of time left. I can't believe how negative CNBC is. They keep talking about how today's declines weren't "enough" to wash out all of the weak holders of stocks. Please. We have seen extreme bearishness here, and I hope the market surges and hurts any short sellers who are being greedy.

The mortgage insurers, ABK & MBI, are trading up big, which should be a good sign. The bank index (BKX), the retail index (RLX), and homebuilders are all in positive territory now.