Fed "Keeping Options Opened"

FOMC meetingWell, what started out looking to be another mild, green trading day (the recent trend), the market faced some serious selling pressure going into close, which brought the Dow down 82 points Wednesday. More importantly, in my opinion, was the rather significant increase in volume compared to recent days past, which has been a big concern for me as of late.

The Fed concluded their FOMC meeting today and announced that they will continue to keep interest rates at 0%. The no change was expected by analysts, as The Fed has reiterated they will do whatever it takes to try and spur spending in this market. Unfortunately, after the trillions and trillions that have been spent, we've only seen a few drops juice.

The Fed also disclosed there plan to slowly begin to ease in the purchasing of mortgage backed debt. This $1.45 trillion dollar campaign has been the biggest cause of keeping interest rates reasonably low for home buyers. With this planned "easing", The Fed hopes to be able to extend buying debt into March of next year. With that in mind, they still follow it all up by the phrase "we will continue to keep our options open." Of course they will. These options meaning they will continue to do whatever they want without having to inform the public. To completely leave the mortgage back debt market in March, after our prolonged dependence on such favorable rates, would be much like leaving a 3 year old in the middle of downtown New York. I do not expect The Fed to make many changes at all (considering they can always just expand their balance sheet like they've been doing), due to continuing problems which are and will be facing consumers. However, they like to throw it out there so people think that they are phasing themselves out.

This economy can only be held up by fabricated government support for so long. For the time being, a weak dollar has given foreign investors a sale on stocks in the US markets, which in turn, is a large reason why we've seen growth in both stocks and bonds recently. However, I expect to see a rebound in the dollar shortly as deflation becomes the problem on hand. Today's sell off could begin the crest of the turn around. If that is the case, I have capital ready to take some strong positions. I will discuss more thoughts on tonight's premium podcast (subscribe here). Happy Trading.


  1. Anonymous Says:

    this site is dead

  2. Anonymous Says:

    Wow! FF where the hell are you? Are you give up already on your bear market theory?
    Please don't get me wrong, I am also on your side. Please update this site once you have the time. But mark my word your waiting period has come probably start 3pm tonight the market will start show us some direction!

  3. cptn Says:

    FF, I have heard up to 1/3 of current home sales are from first time home buyers seeking the tax credit. I have also heard that foreign investors are taking up a good portion of these remaining sales as well. What do you think will happen to the real estate market (home sales, housing starts etc.) after the current incentives run out? I know you are bearish, but in your opinion would this be a good stage for a drop in the markets after these new numbers come in (December-January time line)?

  4. Anonymous Says:

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