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Two Ways: Fed Better Safe than Sorry on Liquidity Programs

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Strengthen your portfolio in good times and bad.

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The Federal Reserve announced today that it was extending a number of its liquidity programs through early 2010 even though conditions in the financial markets have improved.

In a statement released on its website at midday, the Board of Governors said specifically that the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF), the Commercial Paper Funding Facility (CPFF), the Primary Dealer Credit Facility (PDCF), and the Term Securities Lending Facility (TSLF) were all approved for extension through February 1, 2010.

The expiration date for the Term Asset-Backed Securities Loan Facility (TALF) remained unchanged which was originally set for December 31, 2009, and the Term Auction Facility (TAF) continues indefinitely because it does not have a fixed expiration date.

The Board also said it was extending its currency swap agreements with other central banks to February 1.

It will also shed 2 liquidity programs because demand for those auctions weakened as financial conditions improved. The Fed will allow the Money Market Investor Funding Facility (MMIFF) to expire as well because of such improvements.

For more on the banking sector, see Minyan Peter's Three Real Risks to the Future of the Banks.

From the Bull Pen: Nice timing of the statement, eh? Bulls can look to General Dynamics (GD) for a play. The stock successfully tested $55 support and could be attempting $60 resistance for the fourth time. A sell stop can be set below $55.

From the Bear Cave: Tough to be short right now but if that is one's preference, look to stocks that have lagged behind. Allegiant Travel Company (ALGT) may be an option. See if the stock can rally back towards $39 before attempting the downside.

Thirsty Thursday! Send me your suggestions for Happy Hour! Good night!
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No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

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