I think some were genuinely disappointed and downright frustrated after the Fed announcement.
In case you’ve been living under a rock, the Fed did not suggest a cutback on bond purchases as many analysts, economists, pundits and fund managers were expecting. But leave it to the Fed to surprise everyone, for after all —they are focused on the data. As they say, as they should be.
But what is startling is the many opinions about what they should have done – 10 or 15 billion taper, the polls were out there surveying the experts. But let’s remember, we have only one Fed and there is only one Fed Chairman. I trust they know more than any of us, and while opinions are rampant now about a ‘screw up’, a ‘missed opportunity’ or even a ‘complete mess’, it is Chairman Bernanke that is leading. He chooses (wisely!) to look at the data and make the decisions that will benefit the economy. I thank him for not listening to outside influences!
THE VIX
Back in 2007/08 the Fed fell behind the curve. Trust me, that won’t happen again under Bernanke’s watch —or any other Fed Chairman (at least for the foreseeable future). But the market got it right again.
How do I know? The VIX showed its hand early on, hovering near 14% and reflecting market complacency. That’s not always a bad thing, and the worry disappeared after the surprising decision and markets soared. Simply put, the market was not expecting fireworks, whatever the verdict.
EYE ON JOBS DATA
To me, the statement really told us what to look for — the next jobs report. They were all over it on Wednesday, so October 4 will be the big day for the speculators to begin the annoying taper countdown — again.
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Bob Lang has a newly re-launched website at www.explosiveoptions.net, where he manages subscribers, writes a newsletter, hosts webinars and has just opened a brand new chat room.
