Fed, who?

Another Fed decision day on tap!   Time sure flies these days!   Coming toward the half year mark, there'll be nothing but uncertainty ahead for the Fed into the next 6 months.   This Fed statement is going to be as difficult as ever.  Basically, taking action in their statement against one set of problem will hurt the other set of problems.    This time, we have inflation against economic growth, dollar against crude, financial sector against commodity sector.     The point is,  if they tilt one way to address one side of the problem it will definitely upset the balance of the other side.    In our opinion, it's best for Fed. to remain vague at this point until "more data " is revealed.      Addressing the high energy price and inflation worry does not mean Fed is going to take any immediate measure to counter them.    "We know the problem of this economy and market,  but we just do not have a satisfying solution at this point!"     This is most likely the best read we are going to get from Fed.  Wishy-washy.   Honestly, what can Fed do at this point?    There's simply no brilliant policy to improve the current situation.      Time is the only thing that can cure an economic downturn and/or an inflationary economy.

Ok, enough Fed noise!   Market seems quite oversold recently and some technicals formed today to suggest it may coincide with the FED. Spinning daily candles all around.   We are talking about the overall market, the indices here and we won't be surprised if a short term bounce starts at some point.    However, even if this bounce starts,  we are likely not going to participate as usual with the beta stocks because the next bounce will simply be a relief bounce at best.   Okay, maybe we'd flip one or two, but that's it.   The commodity market, will also react somewhat to Fed policy tomorrow and we WILL use any weakness to get some of our recent favourite plays.   Also, if the FED is wishy washy as we expect, the dollar bulls will not be happy and this will help the commods'.   If the dollar is to rally, the market needs reassurance rates will go up later in year.  These plays include many "Shale" plays and a few Steel plays.    Speaking of which,  in respect to steels, the RTP Australian price increase achieved of 96.5% for iron ore lumps and 79.9% increase for fines iron ore fines with a Chinese steel producer confirms that supply/ demand for steel making materials is staying tight, which should boost raw material and steel prices.   Higher steel costs in Asia should also lead to greater opportunities for the CLF' X's.   But, this is not the only positive for CLF as the world's largest steelmaker( ArcelorMittel) announced it had signed an agreement to acquire Appalachian based Vol Coal grp, which produced 1.5mln of met coal last year.  Severstal (Russia) has also supposedly submitted a bid for a coal mining complex in the U.S.   This shows the world thinks the U.S is an attractive place to produce,  it shows steel producers are more concerned with the guarantee of supply than costs.   CLF is a key supplier of the iron ore and the met coal they all need.   Arcelor eats up 45% of CLF's iron ore and Severstal recently renegotiated its ore supply agreement with CLF, guess Arcelor will be next!...No better way up for a big steelmaker to shore up supplies than eat up a CLF for breakfast in the future.

Coal and Agri have cooled off a bit lately and today Agri, possibly due to earnings jitters sold off at 2:30pm and many commodity plays followed.  It doesn't really bother us.    In fact, the consolidation action is much needed.    While coal and agri have been cooling off, we've been picking up the heat in the Shale and steel plays since last week as seen in latest alerts.    You see, it just doesn't stop.    We are going to pay particular attention to MON report tomorrow, as oppose to the other major event.  We'd likely save an entry, good or bad guidance report from MON until later.   The guidance that'll be provided during CC will give us a very good clue on the rest of the industry.    As for entertainment, we'll also stick around AH's for RIMM report, as a tradition more than anything else for us Canucks.