Market bottom? Probably not. But the Federal Reserve is awake.
The Fed stepped in a week ago, and injected liquidity in the financial system. But wait: they didn’t buy Treasury Bills (like they often do). They bought mortgage-backed securities.
Look, the Fed made “emergency moves” in the midst of a currency crisis and the Long Term Capital Market meltdown in the fall 1998. The Fed cut rates at their September meeting in 1998. Then two weeks later the Fed gave another “emergency” rate cut. Then they cut rates — again — a month later in November.
These were cuts in the FED FUNDS rate back in 1998 – real interest rate cuts that trickled throughout the economy to “re-liquefy” the financial markets. And the market went on impressive run for the next six months.
The cut the Fed made last Friday was in the DISCOUNT rate – a big difference. This is a nice, but small, gesture. It might be an indicator of more rate cuts to come.
I’m skeptical. Especially since the Fed announced this shift is only temporary. Hmmm.
The indicators I follow are at levels that say the risk in the market is actually pretty LOW right now. But these indicators have NOT started moving up. Market tops happen quickly, market bottoms take a while. Sometimes, a long while.
Lots of money can STILL be lost here. But it appears that anyone who has wanted to sell, probably has sold by now.
Curious if you’re OK? Don’t sit and wonder. Pick up the phone and call us at 732-223-9000.
One thing we’re NOT going to do is “anticipate” things turning around. I’ve learned to accept that “what is, is.” If the indicators start turning up, we’ll start putting money to work. If not, we sit tight.