Back to top

Real Time Insight

Well, my inner macro self shone through today.  The Fed kept its $85 billion in bond buying intact.

Let's revisit a few lines I wrote yesterday.

"My answers here are "what I would do" aka what a reasonable macro economist would do.  In light of that, I would not actually taper until mid-2014  In light of that not being the consensus on the committee, at the moment, I would take $10 billion in bonds off the table".  

- John Blank, quoting himself from yesterday.

Now, I am heading to the gym to bulk up on the barbells, because I was a wimp.   It just goes to show you how difficult it is to stick your neck out in the face of a broad media-driven consensus.  But the September FOMC vote was 9-1 here, and the usual Esther George vote was the naysayer.  It wasn't even close.  

What this says is that the hard macro data prevail. Chairman Bernanke re-iterated that ad nauseum in his press conference.

The timeline is not related to Chairman Bernanke's coming retirement, and it  is not going to be anything else that is political.  The taper will be decided by just the hard cold facts of a muddle through labor market, and obvious stress being imposed on the housing market.  And that means, a change in Fed policy may not happen this fall, unless the labor market data get much better.

This is a lesson for the financial markets, and one that has to be re-learned.  The Fed is an empirical animal.  As investors, we need to keep the hard cold facts in front of us, and see the obvious.

Here is how the financial markets reacted:

(1) S&P 500 up +18 points, to a new high.  Then, up +20 points during the Bernanke question session.
(2) WTI oIl up over $2.50 a barrel.
(3) 10-Year U.S. Treasury rates down 9 basis points, from 2.85% to 2.77%.
(4) Gold prices up $35 an ounce.
(5) VIX volatility measured fell from 14.4 to 13.3

My RTI question:  Act like the Fed.  Start With These Facts.  What Does the Market's Reaction Say to YOU?

Just Released: 5 Stocks to Double

Today, you are invited to download a free Special Report from Zacks Investment Research. It reveals five moves that could gain +100% and more in the next 12 months:

One is a "boring" business delivering blistering growth. Another is a red-hot oil and gas producer set to surge on a drilling breakthrough. Still another, an online payment provider, ignited a 53% sales explosion during the past year.

Close This Panel X

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
RPC INC RES 24.91 +8.35%
LITHIA MOTO… LAD 94.59 +4.60%
DELTA AIR L… DAL 39.15 +3.90%
FLAMEL TECH… FLML 14.51 +3.50%
SOUTHWEST A… LUV 28.87 +2.92%