"It’s doubtful that when Jerome Powell left home this morning he thought "50 bp will really crush the stock market'."
by Tyler Durden ZeroHedge
Commenting on the Fed's emergency rate cut, which while expected was extremely unusual and only the first one since the financial crisis, Obama's chief economic advisor Larry Summers laid out the problem Powell is facing, especially now that the Fed appears to have lost much of its remaining credibility:
Fed Risks 'Scaring People' With Rate Cut. My interview today on the Fed's emergency rate-cut on @BloombergTV.
When you have limited ammunition you have to conserve it. The Fed has limited ammunition with interest rates so low. Interest rates don't cure the #coronovarius and interest rates don't repair supply chains.
While Larry Summers' opinion has been repeatedly discredited over the years, he does bring up a valid point: why is the Fed wasting half of all of its ammo just to delay what is now an inevitable crash, and why scramble with an "intermeeting" cut when it could have jawboned for the next two weeks and waited until the regular March 18 FOMC meeting. If anything, it would at least eliminate the sense of Fed panic from the equation.
Instead, as it stands "it smells like panic" as more than one Wall Street veteran put it.