Forget about Floyd Mayweather, the new heavyweight Champion of the Markets is Ben Bernanke! Winner but not by TKO, by TQE (Technical Quantitative Easing).Coming into today I was trying to look objectively at various tapering
scenarios and their probabilities. The consensus was $10-15 billion
with a 45-50% likelihood from Wall Street. $20 billion a long shot
outlier and perhaps $5 billion on the taper-light side. I only heard
'no move' from one analyst and considered that to have a probability of
20%. The Feds decision to stand pat with their asset purchases is
obviously not a "non-event" as some TV commentators initially stated. The Fed seems to be pointing the finger at
DC referencing fiscal policy drag of up to 1% on the current economy.
Washington debt ceiling negotiations will take center stage immediately beginning tomorrow.
Chairman Bernanke noted the suboptimal growth of the economy and
sup-par job creation as a few reasons for their lack of action today.
Way back when, in the throes of the near complete financial collapse of our great country I was initially championing the Fed Chairman's ingenuity and boldness with their various programs of TARP, TALF ultimately winding up at QE. I state for the record for new comers, I am
no fan of the Feds current QE Infinity program and believe
they may look back at today as a lost opportunity for a first move to begin winding down this program.
That being said, we remain in a slow growth easy money environment which
should reinforce the housing and auto growth story spurring employment,
reinvigorating consumer sentiment and in turn boosting sales, revenues,
earnings and share prices going forward.
I'll be hawking the
wires for any signs of progress from our fearless leadership surrounding
the debt limit and meaningful entitlement reform for any signs we
should alter our exposure to the equity markets but for now we maintain our aggressive posture.
All in all a surprisingly good day.
James.
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