Fed – Starting to do the Right Thing

The stock market rally on Tuesday was a reaction to the fed starting to do the right thing. And that again is its changing focus to increasing liquidity rather than dropping  interest rates.  Even the CNBC talking heads are moving in that direction.  The Fed and the Treasury have to get the dollar turned around if they want to save this market and that means a  quarter point drop, not a three quarter point drop in interest rates.  Will they have the guts to do it?  The market panic overnight with new lows on the dollar is primarily a reflection by investors that they have grave reservations on second thought. 

Now we are back to where we were on Tuesday and Bernanke’s greatest moment is facing him squarely over the few days leading to next week’s Fed meeting.  We are still 13 percent net long.

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