Bernanke's work on the downside of rates is probably done for this cycle, as he went to 1% yesterday. The market reacted well to the news and was up nicely until the last few minutes when either (a) GE said something negative about 2009 profits, or (b) Dow Jones misquoted GE about 2009 profits, or (c) another hedge fund used the strength to raise a few billion to meet redemptions. I'm voting for (c) since I fully expect most rallies to be met with selling from hedge funds and mutual funds through mid-January.
Fast forward to this morning and Asian markets are up about 10% and U.S. futures are strong. The Delta/Northwest merger looks like it's done, the GM/Chrysler deal sounds like it's done. While I think the Fed Funds rate needed to get to this level, I have no idea where this market is going in the short term. Oh and by the way, I didn't make partner at Goldman Sachs again this year.