The New Committee to Save the World: Success!

Today's 75bp rate cut came as no surprise to anybody: if anything, markets were expecting something even bigger. And when markets started trading on Monday morning, the Fed's interventions and policy changes on Sunday were well known. Which means that as far as Fed activity is concerned, the markets have received no good news and possibly even bad news (if they were expecting a 100bp rate cut) since they opened on Monday.

And yet the S&P 500, which opened Monday at 1,266, closed today at 1,330. That's a rise of 64 points, or just over 5%, over the course of two trading sessions. It's actually higher now than it was immediately before traders were mildly disappointed by the 75bp rate cut; it's higher even than it was when Bear Stearns started running into liquidity problems on Thursday. Or, to put it another way, the stock market without Bear Stearns, today, is worth more than the stock market with Bear Stearns, on Friday. And the credit markets look better, too. Which might say something unflattering about Bear Stearns. But it also surely says something reasonably good about the team of Ben Bernanke, Hank Paulson, and Jamie Dimon.