Zacks Analyst Blog Highlights: Countrywide Financial, Citigroup, KB Home and Capital One

Business Wire, Dec 12, 2007

CHICAGO -- Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Countrywide Financial (NYSE: CFC), Citigroup (NYSE: C), KB Home (NYSE: KBH) and Capital One (NYSE: COF).

See the latest posts to the Analyst Blog by visiting: http://at.zacks.com/?id=2673

Here are highlights from Tuesday's Analyst Blog:

The Fed Did the Right Thing

The Fed voted to cut the federal funds rate today by 25 basis points to 4.25%. Futures had also priced in a strong possibility of a 50-basis point cut.

The immediate reaction in the stock market was not positive, with all three major indexes falling. Several of the usual suspects are down as well, including Countrywide Financial (NYSE: CFC), Citigroup (NYSE: C), KB Home (NYSE: KBH) and Capital One (NYSE: COF).

I think this was a knee jerk reaction to the headline cut and ignores the positives within the statement.

Here is why I'm bullish:

* The Federal Open Market Committee (FOMC) dropped the language that described upside risks to inflation and downside risks to growth as being equally balanced.

* The FOMC acknowledged that it needs to be more proactive, saying, "Recent developments, including the deterioration in financial market conditions, have increased the uncertainty surrounding the outlook for economic growth and inflation."

* Not only was there a dissenting vote, Boston Fed President Eric Rosengren, but the dissension was for a larger rate cut. We have not seen this in quite some time. (In October, Kansas City Fed President Thomas Hoenig voted against any rate cut).

The softer language in today's statement all but ensures additional rate cuts. The Fed realizes that it has a problem on its hands and that it needs to act accordingly. It is also very possible that we could see further action involving the discount window and overnight lending - actions that could provide much needed confidence to lenders.

See the latest posts to the Analyst Blog by visiting http://at.zacks.com/?id=2645

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