Later today the end of one of the more important two-day FOMC meetings concludes. Talk of taper (slowing of FED purchases to lower rates) which will directly affect rates and the equity markets becomes reality. The FOMC will let us know if and how much they plan on slowing the punchbowl/stimulus.
Larry Summers Takes Himself out of the FOMC Hunt
Unfortunately for the FOMC, the big news came over the weekend. Wow, did the twitter feed to my cell phone get worked over on Sunday as Larry Summers pulled his name from the FOMC via a letter to President Obama. This was a surprise to many and had much greater impact than we ever thought.
Market’s Rise, Bonds Rise On Summers Withdrawal
Surprisingly the equity markets are making a run and bonds are also cooperating even as the economics continue to just chug along. Market participants are thinking that since Larry Summers is out, Janet Yellen is in, and she is going to be less likely to withdraw stimulus or at least slower than Summer’s would have been. Don’t get too carried away, as in our opinion the FOMC has made it clear what they are going to do. We think the punch bowl will be shrinking.
Within a few hours we will know, so buckle up, it may be a bumpy ride!
Have a great Wednesday!
John Kvalehttp://www.jkfinancialianc.com http://www.street-cents.com 8222 Douglas Ave # 590 Dallas, TX 75225