Investors may find themselves positioned defensively just as things take off. Tom Sowanick is CIO of Clearbrook Research, part of Clearbrook Financial, a Princeton, N.J.-based wealth-management service provider.

FOMC members' heads must have been in hyper-spin mode today and decided, as widely expected, to trim the Fed Funds rate by another 50 basis points to 3%. Imagine the laundry list of things they talked about. Data collection needs to be fixed Why didn't the French warn us about their rogue trader? We have to stop being bullied by investors We can't stop the easing process, because perhaps we were right to make the emergency rate cut last week

Now put that in context of recession mongers feasting on last month's anemic employment gains of only 18,000 and then gorging themselves on an unemployment-rate increase from 4.7% to 5%.

Early indications

Since that report hit though, initial unemployment claims have fallen every week, and are now at their lowest levels since last May. In addition, this morning's ADP Employment Report -- a gauge of non-farm private employment -- came in at 130,000 versus the consensus estimate of only 40,000. These data strongly suggests that either last month's employment report will be revised higher, or that this month's report (due out on Friday) will be stronger than the consensus expectation of 65,000 new jobs.

Last Tuesday's emergency rate cut came on the heels of a 5.7% decline for the S&P 500 in the overnight session on the Martin Luther King holiday. In my view, the Fed was in a panic when it made the largest rate change in 23 years. Whether that was a mistake isn't the issue. The rate cut has worked in restoring investor confidence in the equity market, as it has appreciated 8% from those overnight lows.

But is the consumer is responding to the low interest rate environment? The unambiguous answer is "yes." Mortgage applications have risen sharply over the past month, implying that consumers are either refinancing or beginning to re-enter the housing market. Lower rates act as a stimulus for the economy and the Fed has provided even more of a jolt by furthering lowering rates.

Even today's GDP report of 0.6% needs to discounted, as the lower rate environment begins to spread throughout the economy. The economy did slow significantly from the 4.9% pace in the third quarter of 2007. But we need to remember that GDP in the first quarter of 2007 was an anemic 0.6%, building to 3.8% in the second quarter and increasing to 4.9% in the third quarter.

With so much stimulation already in the system, investors should consider whether their portfolios have become too conservative for what could be the beginning of a new investment and economic cycle.

With monetary policy in "easy mode," investors should anticipate rising commodity and share prices, and perhaps even rising housing demand. Investors may want to consider small-cap stocks and value companies such as financials. -FWR

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