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Bears, Bulls And The Dilemmas They Each Face

This was a day of many emotional ups and downs for bulls:

--up on a strong open;

--down as techs, materials, energy and some financials were sold into the rally;

--up as techs, financials and consumer discretionary rallied modestly in the last 45 minutes.

The central dilemma for bulls is how to entice those sitting on cash back into the market; yesterday's rescue of Fannie and Freddie does help deal with a major systemic risk, but it does not repeal the economic or housing cycle.

Bears have to come to grips with the fact that government has demonstrated it will be proactive as long as it takes. The central tenet of the bears--that Treasury, the Fed, the White House, and Congress have used up all their bullets lowering rates, saving Bear Stearns and now Fannie/Freddie is WRONG--if the situation continues to deteriorate, the government will find new ways to address it.

Fannie_Freddie_Takeover_badge.jpg

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CNBC's Names in the News:

Freddie Mac

Fannie Mae

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