The Setup After the Post-Fed Wallop

 | Sep 21, 2011 | 4:20 PM EDT
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Did anyone get the license plate of that truck? I think it was a vanity plate. I think it had the word "significant" on it. Because that's the word that the Fed inserted before the term "downside risk," a word that didn't exist in the Aug. 9 statement that jumped at you this time around.

So we got one of those old-time selloffs, one of those that took down not only the companies that do poorly when there is significant risk -- you know, the usual suspects they shoot every day when things are said to be bad: the rails, the chemicals, the papers, the minerals -- but also the "recession rich" stocks -- new term -- the ones that make you rich if there is a recession.

Yep, it was an S&P jailbreak.

So now we sort it out. We take the Fed at its word and accept that its bond-buying binge is not going to offset the new significant downside risk, and we wait out a couple of days before we wade back in and buy the high-yielders that will attract so much money now that the Fed has even taken away whatever yield that was still there for long-term bonds.

Yep, the S&P truck ran over everything.

Now we wait to see what gets up, because no matter what happens now, we know that the market has identified winners that just keep winning when the programs are over.

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