Posted by Davy Bui on December 6th, 2007 in Market Commentary
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Watching today’s market action reminds me of the 2004 US Presidential election aftermath and the infamous headline, “How can 59,054,087 people be so DUMB?”

The Bank of England announced a cut in their interest rate to 5.5% and the markets responded with the FTSE 100 ending slightly down on the day. Who can really say why but maybe investors over there understand the implications of a central bank cutting into the face of inflation and what would drive such actions? (hint: it’s not pretty and it starts with ‘de’ and rhymes with inflation)

Over here, odds are at least 50/50 that the Fed will cut at twice that (after having already cut 75bp) and investors are bidding this market up on the news of some screwy mortgage (non-)fix.

I haven’t been doing this investing thing for decades or anything but if there was ever a rally to sell into (if you need it), this looks to be it. Who knows when the the party will end but be fast or you’ll be like Chuck Prince — still dancing even after the band’s stopped playing.