Billmon: Sixteen Steps and a Stumble

Actually, the old Wall Street saying used to be three steps and a stumble -- meaning that when the Fed raised the Discount Rate three times, the stock market usually took it on the chin. But that was before the "new economy" changed everything.

Nobody pays much attention these days to the Discount Rate (what the Fed charges on overnight loans to member banks.) Now it's all about the Federal Funds Rate (what banks charge each other for overnight money) and the Fed last week completed its 16th policy move in the current tightening cycle, which began in June 2004. Quarter Point Al has given way to Quarter Point Ben.