“The big event this week is Wednesday, when U.S. Federal Reserve Chair Ben Bernanke testifies in front of the Joint Economic Committee, while the Fed releases the FOMC minutes to the April 30 and May 1 meeting.
The markets were all aflutter last week as John Williams from the San Francisco Fed (a dove) indicated he wanted to taper off purchases sooner rather than later.
But Bernanke is likely to reiterate exactly what he said at the May 1 meeting: that they are “prepared to increase or reduce” their bond purchases as the labor markets or inflation outlook changes.
It seems pretty clear to me that the Fed will need three or four months of unequivocal signs the economy is improving before it cuts back on its purchases. Thus far, such evidence is sorely lacking.
Elsewhere:
1) Sell in May? Well, at least not yet…the S&P 500 Index is up 4.4 percent. May has been terrible for the last several years, with the S&P down 6.3 percent in 2012, off 1.4 percent in 2011, and wilting 8.2 percent in 2010.
In fact, the second quarter has been the weak spot for stocks for years: Q2 for the S&P was down about 10 percent in 2012, 19 percent in 2011, and down 16 percent in 2010….”
