Ticonderoga Securities Strategy and Economics / Afternoon Radar Screen
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Ticonderoga Securities Afternoon Market Strategy Reflections by John Stoltzfus
Doin’ the Right Thing: Fed Takes the High Road/Plays It Straight/No Need for Drama…
Shakespeare in the park had plenty of competition in the last 24 hours from the market’s anticipation and collateral drama ahead of the Fed’s FOMC decision this afternoon.
Was it much ado about nothing? Certainly not - but certainly much ado about what in market history will likely be seen as just another “local stop” on the train along the mainline to recovery.
Our "back of the napkin" sound byte reaction reads:
14:15:18 Benchmark rate unchanged - to us, makes sense…
14:16:28 FOMC: Rates to stay "exceptionally low" for "extended period" - to us, a reiteration of the Fed's prior acknowledgment(s) of the situation…
14:17:22 Fed’s plan for reinvestment of mortgage principal - was an expected and “telegraphed” central bank tool box solution...
14:17:41 Our conclusion? The drama was in the prelude.
As today’s FOMC decision fast becomes another signpost in the market’s rearview mirror, the question is popped, what’s next?
More of the same market action we've been experiencing of late, with market churn, grind, and plenty of pondering along the sidelines as the recovery process continues, supported by the Fed’s monetary policy and its balance sheet riding shotgun on the recovery’s progress.
For now, at least, the action provides what we see as a Fed-like “warrantee” for stocks and fixed income with the expiration date left blank for the issuer to fill in when it (the Fed) feels it’s appropriate.
It is important to remember that there are no guarantees in life, and certainly not in the markets. But for now, it looks like the Fed has “extended” some kind of “warrantee” that’ll keep the churn and the channels in place for market activity to play and ploy within for the time being.
Reaction So Far - An Hour Before the Close
The immediate reaction was that the stock market pared its earlier losses and the 10-year yield moved to a level not seen in 16 months (since April 2009) - below 2.75%.
In summary: it’s out of the theater and back to work.
Doin’ the Right Thing: Fed Takes the High Road/Plays It Straight/No Need for Drama…
Shakespeare in the park had plenty of competition in the last 24 hours from the market’s anticipation and collateral drama ahead of the Fed’s FOMC decision this afternoon.
Was it much ado about nothing? Certainly not - but certainly much ado about what in market history will likely be seen as just another “local stop” on the train along the mainline to recovery.
Our "back of the napkin" sound byte reaction reads:
14:15:18 Benchmark rate unchanged - to us, makes sense…
14:16:28 FOMC: Rates to stay "exceptionally low" for "extended period" - to us, a reiteration of the Fed's prior acknowledgment(s) of the situation…
14:17:22 Fed’s plan for reinvestment of mortgage principal - was an expected and “telegraphed” central bank tool box solution...
14:17:41 Our conclusion? The drama was in the prelude.
As today’s FOMC decision fast becomes another signpost in the market’s rearview mirror, the question is popped, what’s next?
More of the same market action we've been experiencing of late, with market churn, grind, and plenty of pondering along the sidelines as the recovery process continues, supported by the Fed’s monetary policy and its balance sheet riding shotgun on the recovery’s progress.
For now, at least, the action provides what we see as a Fed-like “warrantee” for stocks and fixed income with the expiration date left blank for the issuer to fill in when it (the Fed) feels it’s appropriate.
It is important to remember that there are no guarantees in life, and certainly not in the markets. But for now, it looks like the Fed has “extended” some kind of “warrantee” that’ll keep the churn and the channels in place for market activity to play and ploy within for the time being.
Reaction So Far - An Hour Before the Close
The immediate reaction was that the stock market pared its earlier losses and the 10-year yield moved to a level not seen in 16 months (since April 2009) - below 2.75%.
In summary: it’s out of the theater and back to work.
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