We've Seen Our Bottom

Yesterday gold and oil plunged, and while the dollar isn't soaring, it is trading somewhat better. The Fed "disappointed" the Street with a 75-basis-point cut in the fed funds rate the other day. Many were hoping for a full percentage point. I was rooting for 50 basis points, because I think there is liquidity enough in the system. It's just choked up at spots that the Fed's original and innovative plans seems to be addressing (30-year mortgages are back around 5.8% vs. almost 6.5% just a few days ago.) The Fed's statement spent enough time on inflation risks that the world seems comfortable enough that our Fed is still concerned about price levels.

If the dollar continues to stabilize, the benefits to our financial system are enormous. U.S. stocks and bonds can be attractive to international investors on their own merits without the fear of major currency losses. I continue to look for commodities to correct. Gold is trading at $925, down from $1,030, and oil is close to $100 again vs. the $110 of a few days ago. If that unfolds, the dollar will rally and some of the bottlenecks in the bond market will get relief.

Jobless claims were up more than expected, and the four-week moving average rose to 365,000. This is still below the 400,000 number that signals 0% growth, but it is rising and the decline in oil couldn't come at a better time.

Dick Bove, a respected financial industry analyst, says the crisis is over and we should take advantage of "the once-in-a-generation opportunity" to buy banking stocks. OK with me.

I think it's crazy to allow Fannie (FNM - commentary - Cramer's Take) and Freddie (FRE - commentary - Cramer's Take) to lever up even more despite the aid it gives to the mortgage market. They can go to a leverage of 33-to-1, similar to Bear Stearns' (BSC - commentary - Cramer's Take) ratio prior to its collapse. JPMorgan (JPM - commentary - Cramer's Take) is at 12-to-1, according to The Wall Street Journal.

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Vincent Farrell Jr. is a principal of Scotsman Capital Management. Prior to joining Scotsman in April 2005, Farrell 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. He is a regular guest on CNBC as well as other national print and broadcast media.

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.