FED about to strike …
If you don’t understand, why equity markets hesitate to fall …
here comes the explanation 
The FED is expected to STRIKE any time soon!!!
Not a simple emergency cut … as it does not make sense …
2yr paper is trading at or even below 1.5% … FED cuts are not passed on to clients … so the FED started talking about different measures and is expected to start them SOON!!!
As markets keep struggling and fundamentals fall apart and even measures to pump 100bln $ into the markets have not the desired effect, the FED has to do the UNTHINKABLE!
It has to not only finance the “nuclear waste” … it has to BUY it … POOR TAXPAYERS
It is said, that the FED will use its arsenals to put on a GIANT CARRYTRADE … selling for example 2 yr. paper for 1.5% yield and buy the Govt. backed bonds like Freddie Mac and Fannie Mae, which will end up anyway being paid by the taxpayer … or even buy them OUTRIGHT …
Even Bill Gross recommends to do that … or does he know already and this explains that he recently started to buy these bonds 
Some FED watchers even think, the FED could “GO NUCLEAR” by lending money directly to non-banking-companies as there is the feeling, that the money does not reach the ones who need it …
Conclusion:
As the FED starts acting like a “drowning man” … hitting around, fighting for survival of the financial system … EVERYTHING is possible!!!
Could lead to a short term SQUEEZE in equities … but to be honest …
Until there is a real change … I will SELL any bounce!
Tags: Bill Gross, carry trades, FED, mortgages
