This week marks the beginning of the quarterly meeting of the Federal Reserve. On everyone’s mind is when will the Fed start to taper its purchases of debt? Our perspective is that the Fed is currently in a very difficult situation, as the markets are almost completely trading on this issue, and the Feds know it. If they taper, the bond vigilantes will drive up yields and equity markets will probably come off a bit as the stimulus which helped both markets will no longer be there. Since the Fed has tipped its hand, we have seen more triple digit moves in the dow than we have seen in a long time. We reached an intraday peak on May 22nd and since then we have had more than 10 days of the market moving over 100 points in either direction. At the end of last week the DJIA was down approximately 3.2% from the intraday high to the intraday low. We are starting this week with another 100 plus point positive move. What will tomorrow bring or even what will this afternoon bring? Welcome to the rollercoaster. It probably will not end until we all get some clarity from the Federal reserve.
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