Fed Actions Have Immediate Effect

One worrisome aspect to the credit markets is the slight back-up in the three-month London interbank offered rate. While the move is minor, so far it is going the wrong way. It shows that banks are still wary of lending. An optimistic view is that at this time of the year banks tend to hoard liquidity for year-end statement purposes, but, like I say, that's the optimistic view. Short-term Treasury bills are close to 0% which shows a pervasive fear in the market.

The Fed seems to know no limits to unfreeze the credit markets. With the combined $600 billion to buy the debt of the GSEs and the mortgage-backed paper, plus the $200 billion that will be used to buy consumer related loans also announced Tuesday, the Fed has expanded its balance sheet to around $3 trillion.

Somewhere down the road we will have to deal with the inflationary impact of such an expansion, but starting from where we are now that will be a happy day.

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Know What You Own: Farrell mentioned Fannie Mae. Related stocks are Federal Agricultural Mortgage (AGM - commentary - Cramer's Take), Centerline Holding (CHC - commentary - Cramer's Take), SLM (SLM - commentary - Cramer's Take), PHH (PHH - commentary - Cramer's Take), and Financial Federal (FIF - commentary - Cramer's Take).

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Vincent Farrell Jr. is chief investment officer for Soleil Securities Group and a regular guest on CNBC and other national print and broadcast media.

Prior to joining Soleil in August 2008, Farrell was a principal of Scotsman Capital Management. Before that, he was chairman of Victory Capital Management of Cleveland and chairman of Victory SBSF Capital Management in New York. He was a founding partner of Spears Benzak Salomon & Farrell, which was acquired by KeyCorp in 1995. Vince held a variety of positions in his 23 years at SBSF, including chief investment officer, and he served as the portfolio manager on a number of the firm's largest client relationships.

Prior to joining SBSF, Vince spent nine years at Smith Barney as a vice president, sales.

Vince graduated from Princeton University in 1969 and received his MBA from the Iona College Graduate School of Business in 1972.