That was Interesting, Jerome. Now What?

If today’s unanimous decision by the FOMC to effect the largest rate move since 2008 was meant to bring calmness and tranquility to nervous equity investors, it didn’t work. Apart from the magnitude of the cut, timing it on a non-meeting day underscored and highlighted its significance and was meant to assure market participants that the central bank was out in front of the virus effect and had all contingencies covered. Whatever message the Fed meant to send, the one that markets heard told them that the Fed is scared and panicked and didn’t know what else to do. Even with the unexpected 50 basis cut, the DJIA wound up its day 786 points lower than where it began. The Ten-Year’s yield dipped below 1%. Futures markets still imply at least two more rate cuts before year-end. We’re gonna need a bigger punch bowl.