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Fed Minutes Suggest More Money (Supply)

The Fed minutes released 2pm Tuesday seemed to telegraph one message: it's full steam ahead for QE2.

Specifically, the central bank intends to pump up the U.S. economy through the purchase of Treasury bonds.

Minutes of the closed-door deliberations suggest Federal Reserve Chairman Ben Bernanke and his colleagues were closing in on a consensus to launch the debt-purchase program. The Fed also spoke at length about a strategy to boost spending by getting people to think prices could increase in the near future.

Also, the Fed concluded that the economy was growing slower than they had expected. While Fed officials didn't see it slipping back into a recession, they worried the economy had become vulnerable to "potential negative shocks," according to the minutes. They expressed concerns that unemployment, which has been at 9.6 percent for the past months, would stay elevated.

What’s the takeaway?

I don’t think the Fed told the market anything it didn’t already know, muses Tim Seymour. However I’m worried that inflation could become a big, big problem in the wake of all this.

The Fed said if inflation is higher than interest rates it will stimulate the economy. That suggests to me they're looking at generating negative real interest rates. I'd play that long commodities, adds Brian Kelly.

I expect the Fed’s move will play out badly in the long-run, says Guy Adami. A year from now I think we regret this. But right now the market just wants to go higher and I wouldn’t stand in the way.

If you're looking for a technical signal to confirm the rally, a key level in the S&P is 1175, adds Kelly. It's the 78.6% retracement of the April-June declines.

I'm concerned how much complacency we're seeing in the market, says Karen Finerman. The Vix has come way down.

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BREAKING NEWS: MGM

After the bell Tuesday, MGM warned of a third quarter loss, and said it will issue new shares as its largest shareholder cuts its stake in the casino operator.

The news sent shares of MGM down about 5 percent in extended trade.

What's the trade?

If the news takes down rival Las Vegas Sands, I'd buy that dip, says Guy Adami. But stay away from MGM.

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JPMORGAN KICKS OFF BANK EARNINGS SEASON

JPMorgan reports ahead of the bell Wednesday, the first of the big banks to offer a read on the financials.

How should you trade?

I increased my position on Tuesday ahead of the earnings, reveals Karen Finerman.

If JPMorgan has good things to say I’d take a long position in BofA, says Tim Seymour, because it’s a very similar business model and that stock has been badly beaten down.

In the space, I’d watch Goldman as we head into its earnigns on October 19th, says Guy Adami.

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BATTLE OF BILLIONAIRES

Karen Finerman is keeping a close eye on Blackstone's bid for Dynegy Energy, which was rebuffed as "too low" by major shareholder - and Fast Money friend - Carl Icahn.

There are some key points about these developments, says Karen Finerman. They are:

-Management Wants Out
-Undervalues Dynegy's Assets
-Blackstone Tying Up Proxy Firms

I don’t own stock but I think it’s worth a look, says Finerman.


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CALL OF THE DAY: VERIZON

Verizon was the biggest drag on the Dow after Sanford Bernstein analyst Craig Moffett sacked the stock, downgrading it to 'Underperform' from 'Market Perform' based on valuation and risks to dividend growth.

Learn more about the call from this analyst himself. Check out our exlcusive conversation with Craig Moffett. Watch the video now!



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Trader disclosure: On October 12th, 2010, 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 (AGU), (BTU), (NUE), (C), (GS), (INTC), (MSFT); Adami’s wife works at Merck; Finerman’s Firm owns (ARO); Finerman owns (GOOG); Finerman’s Firm owns (IBM); Finerman and Finerman’s Firm own (JPM); Finerman’s Firm own (MCD); Finerman’s Firm owns (RIG); Fienrman’s Firm owns (WMT); Finerman's firm is short (IJR); Finerman's firm is short (MDY); Finerman's firm is short (SPY); Finerman's firm is short (IWM); Finerman’s firm owns S&P 500 puts; Finerman’s firm owns Russell 2000 puts; Seymour owns (AAPL), (GE), (GOOG), (INTC), (MON), (MSFT), (MOS), (POT)

For Brian Kelly
Accounts managed by Kanundrum Capital own (ANDE)
Accounts managed by Kanundrum Capital own (GPRE)
Accounts managed by Kanundrum Capital own (JJG)
Accounts managed by Kanundrum Capital own (SGG)
Accounts managed by Kanundrum Capital own (GLD)
Accounts managed by Kanundrum Capital own (GDXJ)
Accounts managed by Kanundrum Capital own (SLV)
Accounts managed by Kanundrum Capital own (AGM)
Accounts managed by Kanundrum Capital own (MSFT)
Accounts managed by Kanundrum Capital own (FRO)
Accounts managed by Kanundrum Capital own (GLGC)
Accounts managed by Kanundrum Capital own (GS)
Accounts managed by Kanundrum Capital own (JEF)
Accounts managed by Kanundrum Capital own (TIP)
Accounts managed by Kanundrum Capital own (UUP)
Accounts managed by Kanundrum Capital own (PCL)
Accounts managed by Kanundrum Capital own (LPX)
Accounts managed by Kanundrum Capital are short (HYG)
Accounts managed by Kanundrum Capital are short (SLF)
Accounts managed by Kanundrum Capital are short U.K. Pound
Accounts managed by Kanundrum Capital are short Mexican Peso

For Patty Edwards
Edwards Owns (GLD) For Clients
Edwards Owns (PGM) For Clients
Edwards Owns (SPY) For Clients
Edwards Owns (QQQQ) For Clients
Edwards Owns (SH) For Clients
Edwards Owns (VXX) For Clients
Edwards Owns (SBUX) For Clients
Edwards Owns (INTC) For Clients
Edwards Owns (GOOG) For Clients
Edwards Owns (GE) For Clients
Edwards Owns (JPM) For Clients

For Craig Moffett
Bernstein own more than 1% of outstanding common stock of (CMCSA), (CVC), (TWC), (S), (DTV)
Bernstein makes a market in (CMCSA), (DISH), (DTV)
Bernstein’s non-investment banking service clients in the last 12 months include (TWC), (T), (VZ) (S)
Bernstein receive compensation for non-investment banking services from (CVC), (TWC), (T), (VZ)
Bernstein intends to seek compensation for investment banking services in the next 3 months from (CMCSA), (CVC), (TWC), (T), (VZ), (S), (PCS), (DISH), (DTV), (LEAP)

For Zachary Karabell
Karabell Owns (IBM)
River Twice Capital Owns (IBM)
Karabell Owns (NKE)
Karabell Owns (CSCO)
River Twice Capital Owns (CSCO)
River Twice Capital Owns (EXPE)

For Derik Debruin
UBS owned 1% or more of (ILMN) as of last month`s end
A member of DeBruin’s team, or one of their household members owns shares of (TMO)
(MTD) is, or within the past 12 months has been, an investment banking client of UBS
(MTD) is, or within the past 12 months has been, a non-investment banking securities-related client of UBS
Within the past 12 months, UBS has received compensation from (MTD)

For Brian Stutland
***No Disclosures***

For Kurt Hallead
***No Disclosures***



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