Fed Fermentation

SAN FRANCISCO -- So the deed is done and Wall Street doesn't quite know how to react. Although

Tyler Mathisen

assured

CNBC

viewers the

Dow's

"resistance" to the

Fed

rate hike today was "good news" and suggested better times ahead, those a little closer to the action aren't so sure.

"The smart money was getting out while the dumb money was buying into this," said one hedge fund manager. "Look at today's matrix," he said, refering the probability of how the market would react to various scenarios -- and not the

Keanu Reeves

flick. "The Fed does nothing and they buy. The Fed raises and keeps neutral and they buy. The only way they would have sold was if they went to a tightening bias, and for that to happen the Fed would have to do something they've never done -- which is raise with a tightening bias."

(A 50-basis-point move would also have caused a negative reaction, but you don't stop a man when he's rolling.)

"That's the idiocy of the 'priced to perfection' market," the source continued. "They create matrices that are fundamentalized on things that can't happen and won't happen."

I'm a little unclear on "fundamentalized," but I understand it's the working title for the sequel to

Matrix,

with

Uma Thurman

being considered for a co-starring role since

Sandra Bullock

has sworn to

never

work with Keanu again after he ditched her on the

Speed

remake. It may have lacked chivalry but it was a good career move.

Meanwhile, Sam Ginzburg, managing director of equity trading at

Gruntal

, who has not been nearly as dour about the market as our hedge fund friend, was feeling mighty low after today's action.

"I'm confused, frustrated and pissed off," he said. "There are stocks acting like they shouldn't. It's one of those days where you go home, lick your wounds and come back tomorrow for another day. If you can't do that, you shouldn't be doing this." (Words to the wise.)

Ginzburg, who was not expecting a rate hike, was also taken aback that the central bank would "fool around" with the discount rate.

Considering that Ginzburg wasn't anticipating a rate hike, perhaps you'll dismiss his consternation. Still, Ginzburg's short-term calls on the market have been dead-on of late.

Greenback Glitches

Looking ahead, the trader mentioned the dollar as his new prime focus of concern. But before you accuse me of harboring some negative bias, take a look at yourself. Please allow me to present the views of Michael Scarlatos, a global strategist at

IDEAglobal.com

and former

Treasury Department

staff economist.

From a policy perspective, "dollar-yen can go to hell in a hand basket a long as it doesn't bother Mexico and Canada," Scarlatos said, noting the trade-weighted dollar is only down about 5% from its 1999 highs. Such a decline is "marginal," the economist said, using the same term to describe how much currency markets impacted the Fed's decision today.

"According to my former masters at Treasury, trade plays second fiddle to fighting inflation," he said. "If and when we move beyond this period of

FOMC

speculation, then only at that point do we see trade taking primacy."

The economist does not see that happening anytime soon, however, especially with the next round of economic data, notably the August payroll report on Sept. 3. "If we get a strong number, that tells people we might get a hike in October, then perhaps the dollar gets helped out," he said. "We think the next hike, if there is one, is in February but there's too much data to be sure."

Meanwhile, Scarlatos views recent gyrations in the currency market as a function of yen strength vs. dollar weakness and thus not as a threat to our prosperity. "You have to tip your hat to the foreign exchange markets," he said. "The strong yen a year ago ended up being a leading indicator of Japan. Despite its reputation as being home to manipulators, the currency market got the call right on Japan. I believe continued yen strength has some fundamental basis."

So if the dollar isn't a concern and a strong yen might actually be good if it reflects Japan's recovery, what -- if anything -- is the strategist worrying about these days?

After listing the somewhat rote concerns about potential Chinese devaluation, Scarlatos mentioned -- unprompted, I swear -- the "overvalued equity market" in the U.S.

"If the Fed tightened by 50 basis points today, then it's likely the stock market would have tanked, which would have dented the dollar," he said. "There still is risk and concern about the overvalued U.S. equity markets, which poses a threat to the dollar as well."

Got that? The stock market threatens the dollar rather than vice versa. It's a concept I've heard from a few market sooths of late and something to keep in mind if/when other pundits start telling you the dollar is dragging down the

Dow

.

TSC Special

For additional perspective on today's rate hike, check out

The Fed's Catch-22: Will Raising Rates Enhance Growth Yet Again? by staff reporter

David Gaffen

. "Gaffer" gets the nod today.

Report Card, Part 2

Thanks to the miracles of modern technology, we've streamlined the accountability report card begun

yesterday.

Reached today, Kraft said he covered his short on

Amazon.com

(AMZN) - Get Report

at 84 3/8, covered

Microsoft

(MSFT) - Get Report

at 83 5/16, and covered

Excite@Home

(ATHM) - Get Report

at 34 1/2. He bought "a little"

Dell

(DELL) - Get Report

and

Cisco

(CSCO) - Get Report

last week for a trade that "I am in the process of selling today." Kraft has not returned to either

Tommy Hilfiger

(TOM)

or

Fox

(FOX) - Get Report

. I was unable to determine what actions (if any) other prognosticators have taken regarding their respective picks.

Meanwhile, remember the trader who mistakenly bought

Gildan Activewear

(GIL) - Get Report

, as reported on

Aug. 4?

At the time, our source said he would "ride" the stock until 30. Since that bold call, however, Gildan has traded as high as 23 3/4 (on Aug. 6) and then retreated, closing today unchanged at 19 5/8.

Our trader, requesting anonymity now as then, said in a recent interview he did sell some of the Gildan shares. But he has kept a small portion of the original 9,000 share trade and will "hold it forever," suggesting sometimes you need to make a sacrifice to the trading gods and goddesses, especially when they have been kind.

Aaron L. Task writes daily for TheStreet.com. In keeping with TSC's editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet.com. He also doesn't invest in hedge funds or other private investment partnerships. He welcomes your feedback at

taskmaster@thestreet.com.