Happy Days Are Here Again – WSE Pro

While it appeared that the Fed was doing nothing, it had actually signaled the market early in the day that happy days are here again, and not just for Democrats in Congress. By pumping a net of $9.5 billion into the repo pool, the Fed monetized all of the $18 billion in new Treasury paper settling today that hadn’t been bought by foreign central banks–for one day at least. In its statement the Fed said that it saw signs of stabilization in the real housing market. They are wrong, of course, and their enormous pump job tells us that even they know it. The Fed is going to continue to backstop this market and do everything in its power to stop, or at least slow, the housing meltdown. The pigmen think that that will be good for stocks. They acted on that and will continue to do so, so long as the Fed continues to aggressively man the pumps. Click here to download complete report in pdf format (Professional Edition Subscribers).

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This entry was posted on January 31, 2007 at 7:38 pm and is filed under Professional Edition, Today's Markets. You can follow any responses to this entry through the RSS 2.0 feed.