50/50 : A prescription for a BAIL OUT!

One thing that holds true to this very day: "History always repeats itself."
Greedy financial alchemists and their ability to "create" products and then enable the use of leverage to speculators in order to buy their junk is how we get to this point every time. So we resort back to the trusty solution for dealing with this.....a FOMC BAIL OUT!

Today's move confirms the negative job numbers earlier this month......it also confirms that things are weakening at a rapid pace. Inherently lower discount rates are a positive for equities, but I wouldn't start throwing darts at any and everything. Be selective. Go for companies that support the global GDP of 5% and are in secular bull markets ie: Oil Service, Materials, and Tech. Things that are heavily levered to the U.S. consumer should be avoided until residential real estate reverts back to the mean. Until then stick with companies that support global growth and derive half or more of their income from abroad. Think SLB, FCX, and CSCO and all the derivative plays that go with these sectors.

Of course there is the seasonality of a market rally in the 3rd year of a presidential election cycle that occurs about 70+% of the time. For more on that go to www.usfunds.com and listen to some of Frank Holmes web presentations.


Release Date: September 18, 2007
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 4-3/4 percent.
Economic growth was moderate during the first half of the year, but the tightening of credit conditions has the potential to intensify the housing correction and to restrain economic growth more generally. Today’s action is intended to help forestall some of the adverse effects on the broader economy that might otherwise arise from the disruptions in financial markets and to promote moderate growth over time.
Readings on core inflation have improved modestly this year. However, the Committee judges that some inflation risks remain, and it will continue to monitor inflation developments carefully.
Developments in financial markets since the Committee’s last regular meeting have increased the uncertainty surrounding the economic outlook. The Committee will continue to assess the effects of these and other developments on economic prospects and will act as needed to foster price stability and sustainable economic growth.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Charles L. Evans; Thomas M. Hoenig; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; William Poole; Eric Rosengren; and Kevin M. Warsh.
In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 5-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, St. Louis, Minneapolis, Kansas City, and San Francisco.