Wall Street Greek: Morning Coffee: Rally Time

(Stocks in article: NYSE: SPY, NYSE: DIA, Nasdaq: QQQQ, NYSE: SDS, NYSE: WB, NYSE: PNC, NYSE: BAC, NYSE: COF, NYSE: XOM, NYSE: SLM, NYSE: MMM, NYSE: GWW, Nasdaq: WMGI)

Just when you think Ben has let you down, Uncle Ben shows up with creative mitigation. My plate today includes a side portion of crow, but recall that my concerns about the FOMC policy decision were geared to what I thought the Fed would do, not what it should do. Also, it will not intimidate my future forecasts, and this I promise.

After the announcement, I was immediately concerned that the group had not narrowed the margin for the discount rate in order to increase its appeal, but today's action mitigates that concern. Funding should now be available even to shy banks that do not want to alert the market of their stresses. The Fed will not disclose bidder information. The coordination of the effort also helps sooth the market's concern that foreign central banks, especially in Europe, might do something detrimental to the dollar through combat against local inflation. It's funny, just when I thought the Fed was too reactionary (where I wanted proactive measure), it turns out the market and all of us involved are even worse.

The timing of today's action was effective in shutting up Fed critics, myself included. One thing we must never forget is that the Fed always has our backs, however late or reactionary they may be at times. That's important to note, though its been well-reinforced in memory now. I expect this action, in concert with rate reduction and Treasury efforts to improve the reliability of the underlying collateral should go a good ways to restoring some liquidity.

This group is far from perfect though. The Fed has communication issues. I suggest, if I may, that they limit intermeeting discussions by individual representatives and speak in one voice at all times. This would improve clarity of message and reduce market speculation and misunderstanding. The reason I questioned Ben's leadership yesterday was because of the mixed messages coming out of the group, and it's up to the leader to control that. While members can of course express personal opinion, it's probably best for the rest of us that they do so through the better controlled Fed press room and not off-location addresses that while seem perhaps more casual to speakers, are intensely followed by the Street. If this occurs, then comments like Poole's "the Fed will ease only in calamity" earlier this year will never reach market ears. Also, Kohn will not have to qualify his statements and confuse Greeks.

Anyway, this is a buy signal. I believe that if you missed the start of this rally, it's not too late to partake. I do not want to rehash in too much detail, but the kitchen sink write-offs are coming to an end, and tax loss selling should be as well. Capital will be flowing and valuations will be growing. Santa and the January effect should be evident to all, and to all a good trade.