Welcome to a special edition of Thoughts in the Market.

I'm Andrew Sheets, Chief Cross Asset Strategy from Morgan Stanley.

Along with my colleagues bringing you a variety of perspectives,

I'll be discussing trends across the global

investment landscape and how we put those different ideas together. It's Tuesday, March

3rd at 8 PM in London. Today the US Federal Reserve cut its target interest

rate by half a percentage point. That large move

was even more notable due to how quickly the Fed took action. Rather than waiting

until its next regularly scheduled policy meeting on March 18th, it took action

just a few hours ago.

But that wasn't the only significant thing about what happened today.

After the Fed made its move, U.S. stocks fell.

Given that there's quite a bit of conventional wisdom that lower interest rates and

Central Bank support are positives for the stock market, what's going on?

Our first observation is that that conventional wisdom is a lot more unreliable than

appreciated.

While very recent experience has seen stock markets respond favorably to

Central Bank action, a broader look at history gives a much more mixed picture.

When the Federal Reserve lowers interest rates by half a percent or more outside a usual

meeting schedule, it's commonly referred to as an emergency rate cut.

Since 2000, there have been only a handful of such actions, and what's followed in stock markets is decidedly mixed, and if anything, poor.

Looking across these actions, the average performance for global stocks over the next day was negative.

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