Late Thursday, the Federal Reserve announced they had the raised the discount rate to .75% from .50%.  The discount rate is a rate that the Fed charges banks that borrow directly from the Fed.  Basically, an emergency loan if need be.  You can see from the chart below going back to 2003, the discount rate has been flat or dropping since the middle of 2006.

The question of the day:  Is the Fed changing its easy monetary policy?  They (the Fed) claim they are not.  They still expect to keep the financial system loose and rates low for an extended period of time.  This is a significant move but at the end of the day, I don’t think it will have a big negative effect on stocks.  For all of you worried about “printing too much money” and inflation, this is the first step in trying (key word trying) to remove some of that extra stimulus. But, I don’t think its the end of an era of easy money.  It’s going to take a lot more than a .25% hike in the discount rate to end an era of easy money & over leverage.  But, it’s a start.

The trade here remains to be long the dollar.  For full disclosure, I remain long UUP calls.