Fed lowers interest rate to ZERO

**disneysteve** · 03-15-2020, 04:11 PM

Originally posted by disneysteve View Post

We'll have to wait and see how the market reacts.

Well that didn't take long. S&P futures after the announcement dropped 5% hitting the "limit down", meaning they can't fall any further. Dow futures are down over 1,000 points, also triggering the "limit down" level.

It looks like tomorrow may be another rough day on Wall Street.

**kork13** · 03-15-2020, 05:32 PM

That seems a bit strange... Don't the markets generally like the availability of easy money?

The worst thing of this is that they've cut the road out from under themselves -- they've got no further to run with it!

**disneysteve** · 03-15-2020, 05:41 PM

Originally posted by kork13 View Post

That seems a bit strange... Don't the markets generally like the availability of easy money?

The concern, which I guess was correct, is that the market would view it as a panic move rather than a shrewd strategy. And, as you noted, it leaves the Fed very few tools going forward. They will be doing qualitative easing (I've honestly never quite understood exactly what that means) again as they did last time around so hopefully that helps.

I think part of the problem is that this is entirely different than the 2008 financial crisis. This time it isn't a fundamentally financial problem. It wasn't caused by banks and lenders and investors. It's caused by a disease pandemic. Bailing out the banks or airlines or oil companies won't fix it. It's not a problem that can be solved by throwing money at it.

**TexasHusker** · 03-15-2020, 05:57 PM

I’ll be honest, I poo poo’d this thing until a couple of weeks ago. Today, I wonder if we stand on the eve of a Great Depression.

Where is the bottom? Who would know? What is an appropriate fundamental value of the S&P when we don’t know how many businesses are even going to survive this, much less not be profitable.

Take Tata Motors, global carmaker. Their market cap is now below $5 billion. That’s pocket change. That’s near bankruptcy. We could see a massive amount of big time, public company bankruptcies THIS MONTH if things don’t calm down.

Any publicly traded company with a sketchy balance sheet whatsoever IS NOW OFFICIALLY IN JEOPARDY.

**disneysteve** · 03-15-2020, 06:05 PM

Good points, TH. And as more and more jobs and businesses close, millions of people will be missing paychecks for weeks to come. That’s going to have serious lasting effects on the economy. My daughter is out of work for at least 2 weeks and maybe more. CDC said today that gatherings of 50 or more people should be avoided for 8 weeks. That would be catastrophic for the economy.

**TexasHusker** · 03-15-2020, 06:10 PM

If I have to close my franchises, not only do I lose my income, but so do 33 other people. For how long? I’ve got 10K a month in rent payments. Closed down, how long is that sustainable? I’m seriously trying to figure that out!

**disneysteve** · 03-15-2020, 06:18 PM

Originally posted by TexasHusker View Post

If I have to close my franchises, not only do I lose my income, but so do 33 other people. For how long? I’ve got 10K a month in rent payments. Closed down, how long is that sustainable? I’m seriously trying to figure that out!

Businesses worldwide are trying to figure that out.

While I’m worried walking into work every day that I’m going to catch something, I’m also grateful that I have a job that won’t shut down. I know my income is about as safe as it can be. I have no idea how other businesses are going to get through this.

**bjl584** · 03-16-2020, 07:37 AM

Choppy markets until they see a peak and a reduction in new Corona cases.
Probably still a month away give or take.

When the smoke clears I'd expect some smaller companies to disappear while larger ones start laying off workers

**ua_guy** · 03-16-2020, 11:32 AM

As mentioned in another thread, I'm bewildered by the Fed's move. It seems to be the biggest and last card to play, and they just played it, early in the game. Exactly as I thought it would, it induced more panic in a market currently ruled by...panic.

The stock market is sliding but it's only slid to early-2019 levels.

Was it an acknowledgement of underlying issues / looming recession in the economy (even before COVID)?
Is this strictly for large business--and personal/household relief will be coming later?

What did they think this would accomplish?

Fed lowers interest rate to ZERO