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The Post-Fed Paralysis


Last week’s surprise Fed decision to hold off on any “tapering” of its $85-billion-per-month bond-buying scheme caused a lot of dislocation in the financial markets. First there was the big spike higher in stocks, bonds and gold prices immediately following the news. Then just a couple of days later there was some big selling in the equity markets as several Fed governors came out and said that the tapering could begin as soon as next month — depending on the data.

The result of the Fed’s decision last week, and the renewed taper talk that followed, has left the markets somewhat paralyzed about what to do next.

In fact, since the Fed’s decision a week ago, stocks have given back all of their post-decision gains. Bonds have rallied, and bond yields have seen a big plunge. We’ve also seen some modest economic data such as a decline in consumer confidence and a tepid durable goods report.

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archive

The Post-Fed Paralysis


Last week??s surprise Fed decision to hold off on any ??tapering? of its $85-billion-per-month bond-buying scheme caused a lot of dislocation in the financial markets. First there was the big spike higher in stocks, bonds and gold prices immediately following the news. Then just a couple of days later there was some big selling in the equity markets as several Fed governors came out and said that the tapering could begin as soon as next month — depending on the data.

The result of the Fed??s decision last week, and the renewed taper talk that followed, has left the markets somewhat paralyzed about what to do next.

In fact, since the Fed??s decision a week ago, stocks have given back all of their post-decision gains. Bonds have rallied, and bond yields have seen a big plunge. We??ve also seen some modest economic data such as a decline in consumer confidence and a tepid durable goods report.

To read the rest of this article, click here.

Newsletter Signup.

Sign up to the Human Events newsletter

Written By

Doug Fabian is the editor of Successful Investing and High Monthly Income, and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reigns from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert??s Investment Digest. For more than 30 years, Successful Investing (formerly the Telephone Switch Newsletter) has produced double-digit annual gains. Doug has become known for his expert knowledge and timely use of innovative tools like Exchange Traded Funds, bear funds and Enhanced Index funds to profit in any market climate.

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