CNBC's Reaction To Global Rate Cuts Should Be Closely Watched

RATE CUT RANTINGS







*** Updated With Trading Notes ***
*** Is Powerful Short-Covering Rally Possible? ***
*** 10:29-- Hey, Let's Have Guests Wear Obama Buttons! ***
*** Market Swings Now Comical ***
*** Hey Guys, Stop Trying To Analyse This Sell-Off ***
*** CNBC Still Debating "Capitulation"


One of the most irritating habits of CNBC anchors and analysts is their tendency to call for a federal policy change or some other action and then badmouth it once it actually occurs.

After days of clearly pushing for a coordinated global rate cut, the event itself (today's historic joint 50 basis point move) has so far not brought out the standard naysaying from CNBC's own staff, but the morning (or mourning) is still young.

Rick Santelli (seen in right photo) didn't hold back, however: at 8:39am, he said he wondered why futures ever moved higher on this announcement. Now that's a positive outlook! Could it have been the initial surge in European markets that boosted the figures?


What's truly shocking is that notorious inflation hawk Jean Claude Trichet of the European Central Bank actually went along with this, that's the real story here. From al-Reuters:

FRANKFURT, Oct 8 (Reuters) - The European Central Bank cut interest rates on Wednesday for the first time in more than five years as part of coordinated action with other major central banks to shore up the global economy.

The ECB cut its benchmark rate by 50 basis points to 3.75 percent, the first rate cut since June 2003 and sooner than analysts and markets had expected.

"The recent intensification of the financial crisis has augmented the downside risks to growth and thus has diminished further the upside risks to price stability," the ECB said in a statement.

As of 9am, the futures are not holding up, pointing to another substantial sell-off. Which means, of course, that it's time to bring out Art Cashin and his 1000 reasons why the markets will never recover. Only a massive early sell-off on heavy volume will please Cashin.

There's no question that a massive sell-off after a global rate cut would be alarming, normally we should expect a substantial rally. That, of course, can't be blamed on CNBC.

But the markets have not yet opened, so one can hang on to a glimmer of hope. Eventually, the short-sellers will be proven wrong and the resulting rally will be every bit as strong as some of the recent sell-offs. The crowd can't be right forever.


9:39am: the market is attempting the first move into positive territory in days. Obviously, there will be a great deal of skepticism, but consider the potential power of a massive short-covering rally. The slingshot has been stretched so far backward that upward momentum could be breathtaking.

This time, it could be the shorts that are bankrupted!


10:30am: Swings in the Dow this morning would be comical if they weren't so violent. One moment, we're up over a hundred, then in a flash are down by the same, then back to zero. Program trading?

And what's with guests wearing Obama buttons on the air?


12:54pm: I'd love to see CNBC anchors stop trying to lay out rational "reasons" to justify these seemingly-endless declines. It's panic, pure and simple.


1:37pm: I'm tired of hearing CNBC talking heads complain that we can't go higher because of a lack of "capitulation" selling. How would we know it if we saw it? There's no clear definition of the term.


3:54pm: More whining about the lack of capitulation selling as the markets once again tank late in the day. Nothing like a big sell-off to get these guys excited and launching into "I told you so" lectures.

Add to that guests who are unwilling to call stocks cheap, even after an 1800 point drop in the Dow since last Monday, and CNBC has truly earned its Doom and Gloom reputation. We haven't had an up day in over a week, but the supposed "lack of panic selling" means we will keep going lower, according to the Gloomsters.


4:13pm: Meanwhile, they're bragging about a "CNBC effect" which is apparently cutting into retail sales, as nervous shoppers cut back after getting their daily dose of Gloom and Doom.


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