Friends
I am sure the Federal Reserve Chairman is a very nice guy. I also applaud his attempt to continuously explain Fed policy to the public and not be as “cloak and dagger” as his predecessors. The problem with Dr. Bernanke and his fellow Fed Governors is that they basically haven’t been right about the movements of the economy for years. So when the good doctor lays out the Feds game plan and how the actions are based on economic markers, the problem is that they have not been good at predicting the economic markers. The markets got all “hot and bothered” when Dr. Bernanke indicated that if their economic forecasts are correct, then tapering would start later this year and end in the middle of 2014. But once again, since when have their economic predictions been right? So, those jumping to conclusions that tapering will begin sooner than later, are also betting that the Fed’s predictions are correct. Good luck with that strategy.
As for the markets, we expected gyrations today and we got it. By the close, the Dow Jones Industrial Average was down 206 points to finish the day at 15,112. The S&P 500 was down 22 points to close at 1628. Gold was down $17 to trade at $1349 per ounce, while oil was down $.54 to trade at $97.90 per barrel WTI.
The bulls had their way for the past couple of trading sessions, but the Fed seems to have taken the wind out of their sales- at least for a day. Even though the Fed statement really didn’t divulge anything new, traders will spend the next few sessions trying to decide whether, over the coming months, good news will be good news or will good news be bad news… Oh, you know how the rest of it goes.
Have a nice evening everyone.
