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Wall Street seems to follow the New York weather these days: Sunny one day, rainy the next. The problem?

Major Equity Indexes

Index

5-day

Performance (%)*

3-Month Performance (%)

5-year Performance (%)

SPDR S&P 500 Trust (NYSEARCA:SPY)

2.40

7.6

18

Powershares QQQ Trust (NASDAQ:QQQ)

2.20

7

38

SPDR Dow Jones Industrial Average (NYSEARCA:DIA)

1.90

5.1

20

*2.15 PM

Major Precious Metals ETFs/Bond ETFs

ETF

Five-day Performance (%)

3-Month Performance (%)

5-year Performance (%)

SPDR Gold Shares (NYSEARCA:GLD)

-1.3

-13

50

like iShares Silver Trust (NYSEARCA:SLV)

-.80

-23

24

iShares Barclays 20+ Year Treasury Bond (NYSEARCA:TLT)

-0.75

-0.2

25

Wall Street has grown anxious and confused about the fate of the "Fed helicopter" (Quantitative Easing) that has provided the fuel behind the five-year rally in mortgage securities, US Treasuries, and stocks. That's why they follow closely Fed meetings for clues, including the one held on Tuesday and Wednesday this week, which did provide some clarification to ease this anxiety:

The Fed will moderate QE, provided that economic conditions will warrant it. Nevertheless, there is plenty of evidence--some cited by the Fed chairman during the conference session--which suggest that this prospect may not materialize for sometime to come.

First, the world economy continues to slow-down. Two reports published last week-one from IMF and another from the World Bank predict that world economic growth will drop below 3 percent next year. That gives Mr. Bernanke a good excuse to continue buying US Treasuries.

Second, "core inflation" one of the gauges of the Fed's mandate for price stability remains at 1.7 percent, well below the 2 percent target. That Gives Mr. Bernanke another good reason to keep on buying US Treasuries.

Third, unemployment rate, a gauge of the Fed's mandate for high employment also remains above target (elevated-to use his language). That gives Mr. Bernanke a third reason to buy US Treasuries.

Fourth, a weaker yen provide a cushion for US Treasury and equity markets-the yen dropped sharply after today's Fed announcement. Even if the Fed were to slow-down buying of US Treasuries, there would be plenty of funds to fill in the gap, as Japanese Treasuries still yield a fraction of what US Treasuries yield.

Simply put, the Fed will continue QE for sometime, rebuilding household wealth; and interest rates will continue to stay at record low levels in the near future.

What should investors do?

Capitalize on the "wealth effect," the positive impact of asset inflation on consumer wealth and eventually consumer spending, as reflected in retail sales and consumer sentiment data reported last week.

Economic Indicator

Expected

Actual

Retail Sales

0.1%

0.3%

Consumer Sentiment

81.5

82.7

This means buy the shares of consumer companies with sound fundamentals that stand to benefit from robust consumer spending--like PVH Corporation (NYSE:PVH), Ulta Salon (NASDAQ:ULTA), and the Men's Wearhouse (NYSE:MW) that reported strong profits last week.

Company

Expected EPS

Actual EPS

Ulta Salon

$.62

$.65

PVH Corp

1.35

1.91

Men's Wearhouse

.55

.65

Source: Yahoo.finance.com

I particularly like PVH Corporation, the owner of a diversified portfolio of brands - including Calvin Klein, Van Heusen, IZOD, ARROW, and GH Bass & Co. The company trades at a forward PE of 14.82 and growing at 6.72 percent.

Company

Forward PE

Qtrly Revenue Growth (yoy)

Ulta Salon

23.24

30.30%

PVH Corp

14.82

6.72

Men's Wearhouse

12.38

8.20

Source: Yahoo.finance.com

A few words of caution: With the Fed managing interest rates, markets are exposed to a credit risk event, the failure of an institution that has taken excessive credit. That would certainly be bad news for all asset categories.

Source: Fed To Moderate QE: What Should Investors Do?