Originally Posted by FIREdreamer
what happened y'all?
Oh wait a minute. It's time to take my chill pill with a tall glass of water. Ah. Let's see now. Nop, fundamentally nothing's changed. Looks like a bear rally to me. They're gonna keep shaking that tree until all the money comes out. Better hold on!
You certainly maybe right that is a bear rally. However, you are wrong about it not changing things fundamentally.
A .75 Basis point cut has dropped the cost of goods for every bank in America by 16% (4.25-3.5). Banks can either keep the difference and increase profit margin (net interest) or lower rates and encourage borrowing, either result as good as long as the avoid loaning lots of money to people with lousy credits at very low rates. Judging from some the post around here banks seem to be a lot more careful about lending.
It is equivalent of OPEC announcing that tomorrow the price of oil will drop from $90 to $75/barrel, and Airbus and Boeing both annoouncing a buy 5 jets get 1 free promotion. This may not change the fundamental structural problems of the airlines, but for the short and intermediate term it is really good for their profits.