The Fed Saves the Day

 | Jan 25, 2012 | 4:09 PM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

aapl

It's been a while since we've rallied on talk of the Federal Reserve's quantitative easing program, but that is what occurred today. There wasn't any specific plan mentioned for further easing in today's policy statement, but Chairman Ben Bernanke made it clear that the Fed is ready, willing and able to act should the economy falter.

Some might think that it was a negative that the Fed feels the economy is weak enough to justify keeping interest rates low until the end of 2015, but the prospect of endless cheap money had the bulls salivating.

This morning, it looked like the exceptionally strong report from Apple (AAPL) wasn't going to do much to spark the broader market. In fact, the S&P 500 and the DJIA were trading in negative territory despite the stellar news. But a whiff of quantitative easing from the Fed was all it took to light a fire. Precious metals exploded higher, the U.S. dollar was hit hard, and oil and commodities ran as market players rolled out their QE playbooks.  

The big question now is whether we can run further with QE talk in the air. We are already technically extended, and it looked like we might see some "sell the news" action on AAPL's report, but one lesson we learned about QE is that overbought conditions and light volume are irrelevant. Just look at the move from September 2010 through February 2011 to see the power of the Fed when it's running the printing press.

Chasing a thin, straight-up market is never easy, but fighting it has generally been a much bigger mistake. I'm not sure the market is going to fully embrace more quantitative easing, but it obviously is inclined to judging by today's action.

Have a good evening. I'll see you tomorrow.

Columnist Conversations

Chipotle noted on its earnings call that it's having some difficulty securing prime real estate for its namesa...
Manpower Group's (MAN) third quarter EPS came in at $1.61 v. $1.18 year over year on a 4% revenue increase ($U...
Lang:
Many have talked about the recent challenge to the 200 MA of the SPX 500 and how it closed for the first time ...
Earnings have been reasonably positive so far. But more than the actual results, it will be the tone of the co...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.