From The Federal Reserve Website

Release Date: July 13, 2008

For immediate release

The Board of Governors of the Federal Reserve System announced Sunday that it has granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary. Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities. This authorization is intended to supplement the Treasury's existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets.

They have also been empowered to buy stock in both companies from time to time, and as they see fit. Talk about plunge protection. It will be fascinating to see how this all turns out!!

Brilliant Move By Fed

What an ingenious way for the Fed to get out of the rate cutting business and still save the day. They told the brokers today we will take your crap and we will give you some treasuries. It gave the discount window a whole new purpose and maybe changed the way it is actually defined going forward. All of my shorts were covered today including MOO which I was starting to get feelings for. It was still good for over 4 pts and I have no regrets. I got so lucky with DECK today, as I shorted for a quick 4 point gain mid-morning. I was in the trade for 90 minutes. Go figure. It is still my favorite short for 08 which i posted a week or so ago, but not when the Fed is literally shoving dollar bills in our pockets. I traded some BSC in and out at a decent gain and caught SKF for a couple points later in the day.What a crazy etf that one is. It was a phenomenal day for trading and one of my best in a very long while.
The bears will start hitting the airwaves tomorrow about how this is a band aid on cancer, and will point out that the real problems still exist. I could easily lean towards that camp. I think a great argument can be debated on both sides frankly. This was a catalyst event brought on by the Fed and not a reason for the analysts to suddenly go to strong buys tomorrow morning. I guess we all love Ben again ,huh?
I will be doing much due dilly tonight but set ups might be very tough. I will say that I am a lot more bullish than I was yesterday but will even more cautious after today. Lets see how we behave after the short covering cools down. Check you later.