FED cuts Rates by 50 basis points

Now that really is quite a cut.

The unanimous decision by the central bank's policy-makers took the
benchmark federal funds rate, which governs overnight loans between banks, down to 4.75 percent, its lowest since May of last year. The Fed also cut the
discount rate it charges for direct loans to banks by a half-point to 5.25
percent

This should be a nice short term catalyst to financials depending on how well they do in the coming quarter. This is especially true since Lehman reported that things were not as bad as some people thought they would be.

Chris O'Meara, chief financial officer, thought credit conditions were
returning to normal: "The worst is behind us." Lehman, the first big bank to
report, will give comfort that revenue falls can be contained. Morgan Stanley
reports in Wednesday; Bear Stearns and Goldman Sachs tomorrow. The results came in spite of a more than $900m (£447m) fall in fixed income capital markets
revenue to $1.1bn. The drop was in part due to markdowns on leveraged loan
commitments and residential mortgage-related positions.

I would really like to see those Bear Stearns numbers to see how bad they took it on the chin to save those failing funds. In any case this should mean a nice bump in the Financial Select Sector SPDR (XLF) if there is no more sub-prime bad news lurking out there.