FOMC meeting: It hardly can get more dovish....

FOMC comment:

Well it can hardly get more dovish - 90% of the May mentioning of 'tapering' is gone and CONDITIONALITY is now the main ingredients in the Fed cocktail.

 

It also shows a total inconsistency from Fed, and earlier BOE and ECB. Policy makers is now meeting-by-meeting in their strategies – they are essentially "clueless" or at best rudderless. In May Fed was all over market with tapering now everything is hidden behind massive amount of conditionality? Why? Clearly they do not believe in their own model and in May they were willing to ignore low inflation to make statement, now lack of inflation is key concern.  They are re-active not pro-active and as such they offer no clue to future direction or interpretation of the economy.

All in all this should mean end of month rally plus excellent Q3 performance for:

Equity, Gold, weak US Dollar and for overall policy makers and politicians selling the market the "hope" although the reality gets more and more dire.

I maintain that Q3 is the last of the good quarters as the economy is underperforming but also that we know/observe the asset market lags the real economy by one quarter. Enjoy it - next peak will be in 2017 :-)

Sa

 

Med venlig hilsen  |  Best regards
Steen Jakobsen  |  Chief Economist

 

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