BOA-CFC Talks Boost Financials, But Bernanke Can't Hold Markets

As the Journal announced that Bank of Americawas in advanced talks to buyCountrywide, thrifts have shot up: Countrywideup 52 percent, Washington Mutual up 9 percent, Downey up 6 percent.


Bernanke says the Fed,"stands ready to take substantive additional action." That's about as aggressive as the Fed gets making predictions about rate cuts. Sure sounds like there's a good chance the Fed will cut rates, maybe even 50 basis points. Isn't that what the markets wanted?

It was initially. We got a ton of short covering, volume picked up, and just sort of died. Everyone who wanted in got in, and the rest were not that excited.

That's understandable, because there is a cottage industry of Fed skeptics out there. They have several mantras:

--Fed behind the curve.
--Banks are tightening lending standards, so much relief is not getting to consumers anyway.
--Interest rate cuts will not solve problem.

Questions? Comments?