CHESSNOID

The global stock markets are reacting to the Federal Reserve’s emergency moves. This show of speed and decisiveness must be perceived as panic. According to Bloomberg:

The Federal Reserve, in an emergency weekend decision, cut the rate on direct loans to commercial banks and opened up borrowing at the rate to primary dealers in government securities.

In an announcement before the start of trading on the Tokyo Stock Exchange, the Fed lowered its so-called discount rate by a quarter of a percentage point to 3.25 percent. The central bank also approved the financing of JPMorgan Chase & Co.’s purchase of Bear Stearns Cos., including support for as much as $30 billion of Bear’s assets.

Fed Chairman Ben S. Bernanke is stepping up efforts to keep strains in financial markets from spiraling into a full-blown meltdown. Last week the central bank agreed to emergency loans to a non-bank, Bear Stearns, for the first time since the 1960s. Fed officials also announced a program to swap $200 billion in Treasuries for debt including mortgage-backed securities.

It seems with regularity, the federal reserve is acting to keep the stock market from correcting. Most companies are suffering from the Housing Bust the government claimed less than a year ago never existed. Even right now as most economists agree we are in a recession, the white house and federal reserve are afraid of using the R word. There are obvious signs other than increasing prices at the pump towards $4.00 a gallon, such as layoffs, decreased consumer spending. record foreclosures, and commodities hitting new records such as gold breaking the $1,000.00 barrier and crude oil the $110.00 barrier.

The last few times the federal reserve has lowered interest rates and increased liquidity through larger auctions, the stock markets reacted with a quick knee jerk reaction to the upside. Now that we are at 3% in record time and on our way down to 2%, and our economy keeps sliding into a deeper recession, most investors are realizing the white house and federal reserve may not know how to get us out of the mess they helped create. Right now the stock market futures are edging down. Normally, after the federal reserve makes a dramatic move the market moves up. Right now the long term trend of the stock market is down and it seems every rally is just a bull trap. Investors are selling into the rallies either to lock in their gains or cut their losses. We will see if the stock markets will bounce back from the opening lows. We will probably have another emergency rate cut.

The Global stock markets don’t seem to agree with the latest US moves:

Asian stocks plunged Monday after JPMorgan Chase said it would acquire troubled U.S. investment bank Bear Stearns. The U.S. dollar fell sharply against the Japanese yen.

Japan’s benchmark Nikkei stock index and Hong Kong’ Hang Seng index both fell more than 4 percent. The Korea Composite Stock Price Index in Seoul declined more than 3 percent. Markets in Australia and New Zealand also fell.

JPMorgan Chase said Sunday that it would acquire its rival in a deal valued at $236.2 million — or $2 a share and that the Federal Reserve would provide special financing for the deal.

News of the acquisition of Bear Stearns, one of the world’s largest and most venerable investment banks, came just before the opening of markets in Tokyo and Seoul.

The buyout was aimed at averting a bankruptcy and a spreading crisis of confidence in the global financial system. The Fed and the U.S. government swiftly approved the all-stock deal.

“We are worried about the next step,” Shim Jae-youb, a strategist at Meritz Securities in Seoul, said of nagging concerns in Asia that the trouble in big U.S. banks was unlikely to be contained just to Bear Stearns.

U.S. stocks fell sharply Friday after the announcement of a Fed plan in conjunction with JPMorgan Chase to alleviate the liquidity crisis at Bear Stearns touched off concerns about the severity of credit troubles in the world’s largest economy.

Right now the US stock futures look like this: