With its decision cut interest rates to 0% to 0.25%, the Federal Reserve effectively announced that it now understands the scope and magnitude of the current credit and economy crisis.
Before the recent credit crunch (that is, before 2006), most equity traders couldn't have cared less how a rising TED spread might affect the equity markets or how a drop in the Baltic Dry Index might affect global growth ahead.
But with the Fed now injecting trillions of dollars into the capital markets via various term-action facilities, it's very important for market traders and observers to follow how broader credit indicators are faring and what they might be suggesting in terms of equity revaluation.
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