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Deciphering Fed Talk

Wednesday, 21 Mar 2007 | 8:29 PM ET

Nothing feels so good as saying, “I told you so.” Well, maybe that’s just me. But Cramer had the pleasure today after the Federal Reserve made its announcement that interest rates would remain unchanged, shifting its rosy outlook on the economy to a more cautious take on the situation. Cramer calls this the inevitable transition talk that sets the tone for a May rate cut, something he has been predicting for a while now.

Market Rally
Cramer discusses how the Fed works to make the market rally

Cramer’s Fed translation: The market’s not as hot as it used to be, so we’re going do something about it. Hence, the rally we saw in the markets today.

If you’ve been following Mad Money since that tough selloff a few weeks ago, you’d know that the market is bottoming in thirds, just like Cramer said – first the grocery-aisle and medicine stocks, then the financials, and now the minerals, the oils and the cyclicals.

Remember at the beginning of the year Cramer thought the Fed would force the money off the sidelines by lowering the rates it controls – the short rates, the cash rates – making stocks that pay good dividends and have strong growth better bets than cash? Well, that’s what happened today.

Starting today, defense and offense work. Cramer says you can buy the smokestack stocks. You can own Caterpillar. The crisis, our short, national nightmare – to paraphrase a president – is over.

Bottom Line: Cramer’s position all along has been that the Fed would blink and cut rates later this year. Today, we got the first blink, and it probably won’t be the last. That’s the reason for you to be bullish and buying stocks – even aggressive, cyclical stocks – right now.

Questions? Comments? madmoney@cnbc.com

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