One thing you learn, or should learn after being around the market as long as I have, is that “the crowd” is generally always wrong.
I was with “the crowd” today. I expected the Fed to begin tapering of its Quantitative Easing Program. Boy was I (and ‘the crowd’) wrong.
On the short-term, the market rallied sharply on the news, but as clearer heads prevail I would think some give back might be in order.
Some may speculate that the Fed sees economic weakness invisible to mere mortals. Maybe the central bankers are worried about the impending budget/debt ceiling craziness in Washington and unwilling to take actions that could destabilize the markets in front of the negotiations. Or, maybe the Fed is just slavishly adhering to their tapering guidelines. Whatever the reason, they didn’t taper. And that came as a big surprise.
So the clock ticks again on QE, which now carries even greater weight. I say “thank goodness.” We will need something to worry about after the budget debate leaves the headlines.
I am attaching a link to a panel, in which technician/market analyst, Ken Fisher, slams the Fed, Mr. Bernanke and today’s policy statement. Fisher believes long-term rate increases will not choke off demand for credit and might even create more loans, as lenders earn more favorable spreads and borrowers look to tie up (still) very-favorable rates.
What resonates with me in Fisher’s comments is his feeling about the market. He believes that QE is bad for the economy as it slows credit creation, but that the Fed’s actions make little difference at this point. Says Fisher, “We are in a bull market.”
Best of all, the “Crowd” is nowhere near that view.
What do you think?
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