The action is quite lethargic this morning, with the small caps in the Russell 2000 Index noticeably lagging the tape. I am flattening out my portfolio into the FOMC announcement, taking a loss on a poorly-timed volatility hedge, and trimming some longs to lock in gains.
Here is another interesting pre-FOMC chart from @johnkicklighter on Stocktwits, with his qualitative probabilities about the announcement later today. Tapering by December seems to be what the market thinks will happen, while John expects it to be a bit more likely by September.
What say you?
what would happen if Fed increased from 85 to 100 billion?
Good question. Wonder how likely that is?
I don’t think the fundamentals are even close to justify reducing bond purchases yet. Perhaps Bernanke underestimated the market’s reaction to even broaching the subject of reducing QE.
If the Fed really wants to cut back my guess is it’s either:
1) an admission QE isn’t helping very much, or
2) an attempt to reduce speculation.
Of course, in hindsight Greenspan waited for clarity from the economic numbers way too long. Maybe Bernanke is getting nervous he’ll make the same mistake.
a great name, johnkicklighter
Yes!