A surprise rate cut by the Fed can only distract investors from reality for so long. Alan Greenspan is trying everything he can to regain his reputation as the savior of the U.S. economy and the darling of the stock market, but rate cuts can only serve as momentary distractions from the fact that the economy is grinding to a halt like a broken-down clock.
Investors got another wake-up call this morning when Honeywell issued a dismal earnings report and announced it was chopping 6,500 jobs. As earnings bombshells continue to rock Wall Street and America witnesses a steady parade of employees getting pink slips, the economy will tumble further into recession.
Just as we predicted, the latest rally was just a bear trap -- and it's poised to snap shut on hapless bulls that rushed back into the market. But the pain isn't over yet. The reality is that the economy is likely to get worse, and when investors realize this, the stock market will suffer its worst beating yet.