The Message and The Messenger

Friends

Traders were just killing time today, waiting for the FOMC meeting to come to a conclusion and stocks were drifting along right at the breakeven level. Then we got the FOMC statement, which, as we expected, kept the tapering process on schedule and revealed that the unemployment goal posts would be moved (once again not a surprise). Still not much action in stocks at that point until a half hour later (1:30 our time) when Fed Chair Yellen began her first press conference. As she confused those in attendance and those of us watching, stocks tumbled almost 200 Dow points. Now, it wasn’t so much the message, but more the messenger. Ms. Yellen is still going to be very dovish (accommodating) as was Mr. Bernanke, but her delivery was less than inspiring.

Once traders recovered from the fog that Ms. Yellen had caused, stocks began to recover and by the close the Dow Jones Industrial Average was down 114 points to finish the day at 16,222. The S&P 500 was down 11 to close at 1860. Gold was down $29 to trade at $1329 per ounce, while oil was up $.56 to trade at $100.26 per barrel WTI.

We won’t be too hard on Ms. Yellen. It was her first presser and she did have a lot to say. Once market participants learn how to read her, and she gets a little better at staying on point, the press conferences should be less volatile. As for today, the takeaway is that the Fed will remain accommodative for a long time, but if things do improve enough they are ready to change policy. That is not a bad thing.

Have a nice evening everyone.

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