Is the Fed to Blame?

It is a terrible, horrible, not-so-good, very bad day. Or so says the children's book of the same name.

Goldman said Citigroup (C - commentary - Cramer's Take) might have to write off more stuff.

Goldman also said sell General Motors (GM - commentary - Cramer's Take), even though the stock is at a one-million-year low.

Research in Motion (RIMM - commentary - Cramer's Take) dampened their outlook, as did Oracle (ORCL - commentary - Cramer's Take).

Nike (NKE - commentary - Cramer's Take) is off a ton despite a good quarter that was slightly colored by spending for Olympic promotions. Doesn't matter. When they throw out the bath water everything goes with it.

I wonder if the real culprit isn't the Fed. I was hoping the market would give the Fed a pass on Wednesday's meeting, in that they said they were worried about inflation. The market seems to want the real thing, that is, action against inflation, not words. The Fed should have raised rates.

Instead, today oil is up, gold is up, the dollar is down and the market is heading for the seventh level of Dante's hell. The market is being held hostage to the price of oil and the inflationary implications that a rising price portends.

Defense of the dollar and a pre-emptive move against rising inflation should be our primary goal. As Uncle Doug Kass said in his morning note, "the consumer would be more helped by reining in food and energy costs than he would be penalized by higher short-term interest rates."

But even if we deeply discount what analysts think will be earnings for the S&P this year to $87 (which is what my pal Jason Trennert is using at Strategas, the consensus is $93), the market with the average at 1288 (but, hold on, it's falling) is trading at less than 15 times earnings. That is on bad earnings when the multiple usually rises a lot. It seems to me the market is discounting a lot of bad news. It's times like this that opportunities are presented.

I will be on Sir Larry Kudlow's show tonight at 7 PM NY time. Having been so wrong on financial stocks, I have had a dotted line tattooed around my neck. Feel free to cut along said dotted line anytime you want. But don't be afraid to look for opportunities amidst the carnage.

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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.