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Strategies & Market Trends : John Pitera's Market Laboratory
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To: Stoctrash who wrote (10201)10/7/2008 11:46:18 PM
From: John Pitera3 Recommendations  Read Replies (2) of 33421
 
This forray into purchasing commercial paper should provide liquidity to these frozen credit markets. Right now the FED is in a super sweet spot..... the US Dollar reigns supreme, the US financial system is taking out and shooting these bad banks and underwater entities and Now the FED still has the abilility to step in and show Global SERIOUSNESS and RESOLVE in keeping these commercial paper markets solvent and functioning. And to reestablish US bank to Bank lending viability.

This is powerful stuff. The Fed can even create it's own repayment rules that will provide it with a sweetened repayment residual that could mature three or five years after this crisis has ended. This is an unprecedented situation and opportunity for the FED and the US as a whole.

And anyone who says that convenants with deferred payment enancements can not be built into this rescue is ill advised.

I would equate those objections to those of John Bogle who was blathering on 5 months ago about the FED having already used 400 billion of it's 800 billion balance sheet. We are well beyond 1.25 Trillion of operational reserves and liquidity eminating from the Federal Reserve.

Our Central Bank has astonishing powers and the fact that the US is still the Global Headquarters and General Store to stop by and replenish during a once in a 3 century financial crisis will serve both the US and the Global community very well indeed in this most tumultous year of 2008.

If indeed we do witness the SPX experience a "C" wave that revisits the 775 level of 2002; It will represent an extremely rare and propitious time to be deploying funds into US equities.

(the "A" wave being the top on March 10th of 2000 down to the 775 lows we saw in late 2002.)

John
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