Worldwide Discount, Inc

That global coordinated rate cut I've been screaming about for the last several days happened early this morning, a 50 bp cut that happened in the UK, Canada, Switzerland, the US, and in the European Central Bank.

The Federal Reserve lowered its federal funds rate a half a point to 1.50 percent. It also lowered its discount rate as well. The Fed, whose decision was unanimous, last cut rates a quarter point in April.

Central banks in the UK, European Union, Switzerland and elsewhere participated in the move.

The action comes after days of growing pressure on central banks to act together to stem mounting panic in the financial markets.

Fed Chairman Ben Bernanke hinted at a rate cut Tuesday in a speech in Washington.

Australia cut rates a full percentage point Tuesday. Hong Kong authorities cut rates Wednesday.

The European Central Bank, which had long resisted a rate cut because of inflation concerns, was among the central banks lowering borrowing costs.

Pressure for an emergency rate cut has been building in recent weeks as credit markets tightened. The Fed's rate cut follows a number of extraordinary and innovative actions in recent days.

I personally think the cut was too tame. If they were going to do this, it should have been a full 100 bp cut. But once again it was a half-assed measure. US markets are looking at a 1-2% gain right now, Europe has cut a 5% loss into a 2% loss, but Asia tanked 9% as they closed well before this rate cut came.

Still, while the bleeding may actually stop for today and even tomorrow, the LIBOR overnight rocketed back up to 5.375% with 1 and 3 months rates also up by about 20 bp. TED spread is up too. The credit markets are going to detonate within days if this rate cut doesn't obliterate credit spreads by the end of the week.

At best, it's going to be a flat day. I'm expecting another bad day in New York.

[UPDATE] Well that didn't last long. US futures are down across the board again by about 2-3% based on September retail sales numbers.

U.S. stock-index futures sank after retailers reported September sales that disappointed investors, overshadowing an unprecedented series of interest-rate cuts by central banks aimed at unlocking credit markets.

Target Corp. and J.C. Penney Co. tumbled more than 6 percent and Kohl's Corp. declined 2.7 percent as same-store sales decreased last month. Bank of America Corp. tumbled 17 percent after selling stock at a discount to shore up capital. Monsanto Co., the world's biggest maker of seeds, slid 5.6 percent on a 2009 earnings forecast that trailed analysts' estimates. Europe's Dow Jones Stoxx 600 Index, which pared most of a 7.8 percent tumble after the rate cuts, resumed its slide and fell 4.1 percent.

Oh, and the credit markets are locked up still. We just went from flat to another slow triple digit bleed.