Wednesday, September 21, 2005

Ugly Market: What's Next?

Thank god we don't have to deal with the Fed again for at least a month.

Greenspan quelled anxiety and raised rates for an 11th straight time Tuesday, saying the after-effects of Hurricane Katrina have increased near-term economic uncertainty but "do not pose a more persistent threat."

So does that mean oil is plummeting to $35 like that knucklehead Steve Forbes said last week?

The most stirring aspect of Tuesday's decision?

How about the fact that the Fed's language was virtually unchanged from recent past statements.

We believe the dampening effect of Katrina will be temporary and more than offset next year by a boost from the massive federal and private spending needed to rebuild the South.

With the Fed this hawkish, some might say, it's going to be hard to make money in this market.

That's why we're buying Caterpillar and Home Depot, to name few.

Not to mention safehavens like Johnson and Johnson (JNJ) and my personal favorite, Emerson Electric (damn, that dividend is sweet).

You saw Proctor and Gamble (PG) yesterday?

Yep, we own that one too.

On late Tuesday, analysts at Argus Research said the following:
With the economy expanding steadily at a rate near its long-term average of 3.5 percent — and Greenspan rapidly running out of time in his 18-year term as Fed chief — the central bank is slowly tightening credit to prevent any overheating that could lead to accelerating inflation.
We take that dispatch seriously, and we think you should as well.

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