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Neil Cavuto Literally Sugarcoats Wall Street Worries

Reported by Melanie - January 30, 2008 -

Once again, if you plan your future and you manage your fortunes based on the "business news" you get from Fox's "premiere business news" show, Your World w/Neil Cavuto, you do so at your peril. You aren't getting the whole story about what's happening on Wall Street or in the economy and you might be in for a big surprise.

Take today (January 30, 2008) for example. The Federal Reserve lowered interest rates by .50 basis points and the Dow ended the day down nearly 40 points after being up almost 200. You don't have to know a lot about "the markets" or financial stuff to know that sounds strange; Wall Street loves rate cuts. So, what's up? Well, if you watched Cavuto you'd think, not much.

Cavuto opened his show with a Fox News Alert (FNA) and,

Wall Street. Stocks all over the map as the Fed cuts interest rates a second time in more than a week. And the Fed sure seemed worried and is that why the Dow gave up 220 points from its heights today? Here is where we stand [shot of "the big board" which was down 50.72 at that moment before it settled down 37.47] on a day we saw the Dow move north of a 170 point gain after the Federal Reserve cut interest rates another half point, make that one and one quarter points, again, in little more than a week. On a day we saw banks quickly following suit, lowering their prime rate to 6%, Bank of America, all the major banks lowering that, so home equity loans got cheaper today, a lot of mortgages got cheaper today, general borrowing costs across the board getting cheaper today. But a sell off today. We think we know why and you might be surprised. More on the markets and what happened.

Roughly 30 minutes later Cavuto introduced Terry Keenan to tell us what did happen. Keenen talked about the GDP number which was released this morning and about some concerns about recession and then ended with this:

Fears of rising prices won't keep Wall Street coming back for more ultimately sent the market lower on the day and the market's already asking for another rate cut in March and a Fed funds rate perhaps as low as 2%, one point lower, by year's end.

To which Cavuto responded: "See, you give these guys some candy and they want more candy."

Comment: So, the Dow fell because traders want more "candy" in the form of another rate cut huh? Not exactly. What Cavuto didn't tell his audience was that Bond-Insurer Concern Outweighs Rate Cut. This is what the "bond-insurer concern" is all about: MBIA, Ambac Understate Losses: Short Seller, and that's not to mention that the S&P Lowers or May Cut $534 Billion of Subprime Debt, or that financial institutions could lose more than $265 Billion in the "mortgage mess." These are incredible numbers we're talking about folks and it looks like we're in for a rough ride. But on Fox, it's about nothing more than candy. Boy, you can really tell it's an election year.