Floor Traders Nervous

January 10, 2002
Jon Najarian

Tomorrow
in San Francisco, Federal Reserve Chairman Alan Greenspan will deliver his first
comments on the economy’s prospects since last October.
Traders on the floors are nervous about what the Fed Chair will say, as the
bears hope he will reverse course and end a year-long rate-easing cycle, while
the bulls are hoping for comments featuring words like bottoming, turnaround,
etc.

While
the Fed’s 11 interest rate cuts probably softened the hard landing we were
heading for, they’ve failed to jumpstart an economy in contraction. Even though
the 1.75% Fed Funds rate represents a level not seen for 40 years, I doubt we’d
find too many bulls among the 1.3 million folks that have been put out of work
since last March. It’s extremely unlikely the Fed will begin raising rates until
after the unemployment rate, presently precariously perched just under 6%,
begins to diminish. Given the normal layoffs that hit the January report and the
fragile recovery we’ve begun, I just can’t see the Fed raising rates until the
late third, or fourth quarter.

Anyone
who regularly watches our television show, “Doctor
J & the Traders” on www.webfn.com,
knows our panel has been pounding the table (bullish) on discount stores and not
surprisingly, those stores fared better than apparel chains. One particular
discount retailer that usually skims under the radar is Fred’s
Inc.
(
FRED |
Quote |
Chart |
News |
PowerRating), which is a
small discount retailer. This morning they said they are on track to exceed their financial goals for the fourth quarter and that total retail sales rose
18% in December, while same-store sales increased 9.1%. The stock traded up to
$43 in pre-market, but has sold back down to $40.31 and may represent a real
value at that level.

Floor Traders Nervous

BUY THE FEAR, SELL THE GREED

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