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Fed Telling Investors ‘Risk-On’: Fast Traders

Wall Street was absolutely buzzing on Wednesday after the latest Fed statement indicated that our central bank is unlikely to raise interest rates before late 2014, extending a period of record-low rates by more than a year.

“The rest of the statement seemed almost like a ‘cut and paste job’ from last time,” add the Fast Money pros.

In other words the Fed again said what it has said before; “the economy has been expanding moderately... the unemployment rate remains elevated... and inflation has been subdued.”

Considering the only big news from the statement was low rates for even longer, how should you trade?

Strategy Session with the Fast Money traders

Fast pro Brian Kelly says it’s risk on. “Effectively (the Fed) is forcing investors into riskier assets. The message they’re telegraphing is they’re going to print enough money to create a cyclical rebound. I’d play it with coal via the KOL.”

Guy Adami suggests looking at another area of the market -gold . He thinks the latest Fed statement sends the precious metal sharply higher as Western nations again ‘race to debase.’ (That is to say, Adami believes gold will become that much more attractive as an alternative currency. ) “I think the next leg is probably toward $2000 – downside risk is fairly small and upside may be huge," he says.

“Unchanged” is what trader Stephen Weiss takes away – in every way; the trades that worked last year – should work again this year. “Money will seek yield," he says. “I’d look at MLPs or companies with attractive yields such as Verizon.”

Ever the contrarian trader Steve Cortes suggests keeping an eye on the US dollar – which he expects to gain. Although the greenback sold-off in the wake of the Fed statement, Cortes sees the statement as a sign that the economy is fragile. He says, “as accommodative as the Fed must be, the ECB will have to do that much more.”




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Trader disclosure: On Jan 25, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Adami owns C; Adami owns GS; Adami owns INTC; Adami owns AGU; Adami owns MSFT; Weiss is long UGL; Weiss is long ETP; Weiss is long WLP; Weiss is long QCOM; Weiss is long BRCM; Weiss is long EUO

For Brian Kelly
Shelter Harbor Capital is long KOL
Shelter Harbor Capital is long US Treasuries
Shelter Harbor Capital is long GLD
Shelter Harbor Capital is long XHB

For Tony Wible
Janney Montgomery Scott is a market maker in the securities of NFLX, and may at any time hold a long or short position in this security.
Janney Montgomery Scott may seek compensation for investment banking services from the subject company (ies) NFLX security in the next 3 months.
The research analyst is compensated based on, in part, Janney Montgomery Scott's profitability, which includes its investment banking revenues.

For Brian Marshall
(AAPL) Neither ISI nor its affiliates beneficially own 1% or more of any class of common equity securities of the subject companies referenced in the Report. No person(s) responsible for preparing this Report or a member of his/her household serve as an officer, director or advisory board member of any of the subject companies. No person(s) preparing this report or a member of his/her household have a financial interest in the subject companies of this Report. At various times, the employees and owners of ISI, other than those preparing this Report, may transact in the securities discussed in this Report. Neither ISI nor its affiliates have any investment banking or market making operations. No person(s) preparing this research Report has received non-investment banking compensation from the subject company in the past 12 months. ISI does and seeks to do business with companies covered in this research Report and has received non-investment banking compensation in the past 12 months




CNBC.com with wires.

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