You never see those market drops coming… especially on a day the Fed lowers rates. At least I don’t, so that’s where diversification saves the day.   And why was the rate reduction just not low enough today? Not enough of a rate cut? I think that’s just journalistic license in the absence of any better explanation. Okay, maybe because the “market” thinks the Fed doesn’t get it, and the credit situation is just getting worse.  But the quarter point reduction was expected, and the Fed left the door open to more rate cuts- if and when necessary. The market reacts to the short-term however, and wanted more “relief” say the experts. Like anyone really knows? For millions of ARM (and other) borrowers at least today should spell relief. Interest rates have now been cut three times since September and many of the ARM resets over the next 6-12 months will not be quite as severe.  The Fed will probably cut again, and I’ll bet the market grudgingly responds.  But first lenders need to figure out how to lend money again or we’re not going to get anywhere. And I suspect that’s what’s got Mr. Market really troubled.
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