And just like that in as polite a manner as possible the Fed says no tapering. And the Fed admits that a change to its monetary policy could have an adverse effect on the economy. That easy money will continue for the time being. But ‘good’ things are ahead offering jobless procrastinations for the end of 2016 near 5.6%, and a growth rate next year that will be approximately 2.6% percent.
Investors can now rest easy because the door has been opened ever more slightly for further backtracking should the economy show weakness in the coming months. Meaning that tapering may not even come in December. This will essentially make trading in the EUR, GBP, JPY, and JPY extremely volatile the next two days before going into weekend as investors try to find ‘true value’ for currencies they may have refused to carry. However, the ever present ‘smart money’ should always give traders pause and the realization that not everything will be a one way track upwards. In other words many folks have been long for the past few weeks in major currencies versus the USD and may sell off for profits when their bottom lines become enough to make their offices happy.
Equities should be brisk in Asia when the lights are turned on for Thursday’s early morning sessions in a few hours time.
The Fed is back in town and the party has just gotten a bit more rowdy as they fuel the crowd with plenty of cheap drinks. Ben Bernanke is going to leave the Federal Reserve in a few months time flying his helicopter high into the sky and dropping barrels of money into the streets it would appear. What comes down the road will be someone else’s problem.
- Robert Petrucci