The Fed Walks The Walk Instead Of Just Talking The Talk
To
say that yesterday’s move by the Federal Reserve was welcomed by the markets
would be like saying that President Clinton likes girls. The markets LOVED the
Fed action! As for President Clinton, suffice it to say he is more than
fond of the opposite sex.
What we really liked was the timing and the size of the Fed’s move. You may
recall that we compared the Fed’s December action being akin to seeing a
drowning man and telling him, “Don’t worry. I see you drowning, and I’ll be
back in a month with some help!†Yesterday’s move showed us the Fed is not
just willing to talk the talk, but also walk the walk.
It’s easy for Florida State to swagger all over television and speculate about
whether the National Championship should go to them or Miami, but to actually
walk the walk is exceedingly more difficult that simply talking the talk. The
stock market bulls are also walking the walk, as the market is holding (as of
12:40pm CST) most of yesterday’s gains and we think that’s a significant
accomplishment.
The financial stocks and brokerages reacted in a big way to the rate cut and
most are still trading higher. Our favorites since December continue to be Goldman
Sachs
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PowerRating), Merrill Lynch
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Of that group, only GS is giving ground, but the bull call spread we targeted
back in December should be paying huge dividends despite the $3 sell off.
Bearish Weighted Put / Call indicators we’re watching:
