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Yesterday was an interesting day in the world of financial markets, if you think seeing a huge storm heading your way "interesting," and today it gets even more "interesting."
Hoping to halt a market meltdown and prevent a recession, the Federal Reserve lowered its overnight lending rate by three quarters of a percentage point to 3.50% on Tuesday in a rare move between formal meetings.
Nobody watches NASCAR to see cars go around in circles. We know what makes the highlights... watch the video we have as this day trader suddenly realizes the market has raped him hard...
How does this play out? Watch this day trader lose his life savings last night:
Apparently reason #34,987 why Youtube sucks - people had some of the videos pulled because the guy cursed too much - if you lost this much money, you'd probably cuss too..
The best part is that people are making parodies of this guy's video:
The 75 basis-point surprise cut came after global financial markets sold off in dramatic fashion on Monday on fears that bad bets in credit markets could spread further and drive the U.S. economy into recession.
"The committee took this action in view of a weakening economic outlook and increasing downside risks to growth," the Federal Open Market Committee said in a statement. The Fed also lowered its discount rate by 75 basis points to 4%.
It was the largest cut in the federal funds rate since 1982, after the FOMC had driven rates to 20% to kill inflation.
U.S. stocks opened with huge losses. The Dow Jones Industrial Average was down more than 450 points, or more than 3%. Treasurys rallied.
"This move is not an instant fix," wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. "The economy is still staring recession in the face, but at least the Fed now gets it."
With the move coming just eight days before the next scheduled meeting, "there can be no doubt that the timing of this morning's move is aimed at supporting global financial markets after yesterday's global equity meltdown," wrote Joshua Shapiro, economist for MFR Inc.
Some traders said the Fed's move sniffed of panic. "I think that there's an element of thinking that, if the Fed is so worried that it is cutting rates, then that is feeding into fears that the U.S. economy is in really bad shape," said David Page, a strategist at Investec Securities in London.
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