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Halftime: Pros Target Key Comments in Fed Statement

Wednesday, 22 Jun 2011 | 1:42 PM ET

Once again the state of the economy landed in the spotlight with the Street looking for clues in the statement released by the Federal Reserve at the conclusion of its two day meetings.

Fast Money traders Dennis Gartman, Brian Kelly and JJ Kinahan were among the legions of stock market pros parsing through the statement’s language – looking for clues and making bets accordingly.

Here’s what they think stands out.

Trader's Take: What Fed Really Said
Reading between the lines for what's really new in the Fed decision, with Dennis Gartman, The Gartman Letter; Brian Kelly, Kanundrum Capital; J.J. Kinahan, TD Ameritrade.

Brian Kelly

Fast trader Brian Kelly focussed on the Fed statement's outlook for inflation in the energy markets.

“The Committee anticipates that inflation will subside to levels at or below those consistent with the Committee's dual mandate as the effects of past energy and other commodity price increases dissipate."

Kelly takes comments to mean that the Fed is betting on lower oil .

Dennis Gartman

Gartman is largely focussed on the speed of the recovery. "The economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected," according to the statement.

Bernanke Press Conference Playbook
How to trade on the Fed's decision, with Dennis Gartman, The Gartman Letter; Brian Kelly, Kanundrum Capital; J.J. Kinahan, TD Ameritrade.

He feels the preceding statement, combined with all the negative economic data out over the last few weeks, confirms his belief that economies of the world are getting weaker. As a result he’s cautious copper .

If you’re looking for a trade from the long side – the only commodity that makes sense right now according to Gartman is gold . “It’s still moving from the lower left to the upper right,” and with the Fed likely to err on the side of easy money, Gartman expects the trend to continue.

Gartman also noted comments made about the "supply chain disruptions associated with the tragic events in Japan," according to the statement.

"That was unusual. That doesn't typically happen in a Fed statement," explains Gartman. "They've talked about foreign concerns but this time they talked specifically about Japan and I think investors need to pay attention to that."

JJ Kinahan

Options trader JJ Kinahan was focused on rates remaining low for an extended period.

”The Committee continues to anticipate that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate for an extended period,” according to the statement.

He thinks low rates are good for banks in the long run, but suggests looking at banks with a large brokerage business such as Goldman and steering clear of banks with big real estate holdings after the Fed said, “investment in nonresidential structures is still weak, and the housing sector continues to be depressed.”



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Trader disclosure: On June 22, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Kinahan Owns (AKS); Kinahan Is Short (SPY); Kinahan Is Short (SLV); Kinahan is short (WFC) puts

For Brian Kelly
Accounts Managed By Brian Kelly Capital Are Long the Euro
Accounts Managed By Brian Kelly Capital Own (GLD)
Accounts Managed By Brian Kelly Capital Own (SLV)
Accounts Managed By Brian Kelly Capital Own (VIX) calls
Accounts Managed By Brian Kelly Capital Own (VLO)
Accounts Managed By Brian Kelly Capital Own (WFC)
Accounts Managed By Brian Kelly Capital Own (FCX)
Accounts Managed By Brian Kelly Capital Own (ATW)
Accounts Managed By Brian Kelly Capital Own (JPM)
Accounts Managed By Brian Kelly Capital Are Short the U.S. Dollar

For Dennis Gartman
Funds Managed By Dennis Gartman Are Long Gold
Funds Managed By Dennis Gartman Are Short Euro
Funds Managed By Dennis Gartman Are Short British Pound Sterling


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