For several weeks, a rotation has been underway in the U.S. market, with money moving away from some...
Fed Leaves Little Doubt
03/28/2013 8:30 am EST
MoneyShow's Jim Jubak reviews the latest announcement from the FOMC meeting, and believes that this is something that investors should not ignore.
The Federal Reserve has done really pretty much everything it can do to tell investors in the United States and around the world that nothing is going to change. The Fed, in the most recent vote, a majority—a big majority—said that they don’t expect to raise short-term interest rates until 2015, confirming that.
The Fed said, "Well, you know, we actually see unemployment falling a little bit in 2013, but we don’t see it falling enough to make us change our minds about buying $45 billion worth of Treasuries every month. We’re going to continue that policy until we see a major change. We’re worried about the fiscal policies coming out of Washington and budget cuts, so we’re going to keep the course."
Keep the course, keep the course, keep the course. That’s basically what the Fed said today, so if you’re looking for sort of a rock in the middle of all the turmoil in the financial world, the Fed’s it. If you’ve got bets that say the Fed is going to continue to put money into the economy, I think your bet is a good bet. If you’re basically saying rates are going to stay low for 2013 and 2014, I think that’s a good bet.
What the Fed has been trying to do is basically give people some certainty in a world where uncertainty itself is high enough to lead to fear, to change the course of events. You’ve got a really, really, very stable US market. The VIX, which measures volatility in the stock market, is down near way, way, way down near lows.
There’s no volatility to speak of...so really what the Fed has done is taken the US market and tried to insulate it from the rest of the world, and that of course gives the rest of the world a little bit of insurance as well.
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