Friends
As the late great Harry Caray used to say- “Holy Cow”. In a shocker, the FOMC announced today that there will be no change to the amount of punch that is poured into the punch bowl on a monthly basis, just yet. That’s right folks, no taper. What does this mean? Did Dr. Bernanke and crew come to the conclusion that the economy can’t handle the taper at this moment? Is that good news? No matter, what Dr. Bernanke did make clear in his press conference, at least to us, is that he would be happy just to fade away for the next few months and let the next Fed Chair decide when to begin to change policy.
Stocks had been drifting in negative territory all morning, but when the “no taper” bombshell hit, the shorts scrambled to cover, even though one pundit after another predicted a market downdraft if there was no taper, and the market averages surged to new highs. By the close, the Dow Jones Industrial Average was up 147 points to finish the day at 15,676. The S&P 500 was up 20 points to close at 1725. Gold was up $55 to trade at $1364 per ounce, while oil was up $2.80 to trade at $108.22 per barrel WTI.
You talk about catching traders leaning the wrong way. Both bond and stock bears were caught firmly on the wrong side of today’s move. Has Dr. Bernanke opened up a wide path for the bulls to charge through? Well, it is only one day, but it sure looked like the lame duck Fed Chairman was signaling the all clear sign to investors. It’s like he doesn’t want to see all the work he’s done to get asset prices higher go to waste, especially while he is still in charge. Most pundits and economist are going to have to go back to the drawing board over the next couple of days to rethink the rest of the year. All in all, today was one of the most interesting of the year. We’ll have more to say about today’s events over the next couple of days. Stay tuned.
Have a nice evening everyone.
