How The Fed’s Latest Move affects you

adamJim: Hi Adam. First let me thank you for recently making a couple of great calls for our readers recently regarding Apple and Facebook- both stocks flying.

Adam: Pleasure…

Jim: Next, of course, The Fed’s meeting. Your thoughts, what it really means under the surface, and how can we profit?

Adam: First off, let’s discuss what just happened. The Fed decided to taper QE by $10B each month…which means that are still printing $75B every month. Or instead of $5b/day it is now $3.75B. Second the Fed made it very clear that this is a very mild taper and is NOT tightening. The difference being that the Fed will continue to flood the system with liquidity. Just at a slightly slower rate than before. That is bullish for the stock market.

Jim: And it’s not insignificant that this was the outgoing Fed chairman’s final conference. Is this just a political event for his benefit?

Adam: I’ll let the readers decide- but it is VERY obvious that The Fed Chairman walks out a hero on multiple fronts. First, he saved the economy from falling into a depression in the immediate aftermath of the 2008 financial crisis. Second, because of his highly accommodative policies (i.e. printing money) the S&P 500 and the US economy soared to new record highs.  Finally, he began to unwind QE before the new Fed chair (Janet Yellen) takes over next year. Your readers are very intelligent and are able to read between the lines. Put simply, the Fed made it clear today that it will continue to support its easy money policies for the next several years

Jim: So he goes out a hero. Is there anything to say The Fed won’t reverse this reduction and go back to $85 billion a month if things change?

Adam: Nothing at all and that is a great point. Essentially, the Fed hedged itself today by taking “measured” steps to print less money (taper QE) and still left the door open to print more, if needed.

Jim: So what’s your strategy moving forward into 2014, and any changes to it after today’s action?

Adam: The strategy remains the same- we are in a very strong bull market and until that ends. We are going to continue to err on the long side. The primary fundamental reason behind the entire 4.5 yr bull market we have seen since the March 2009 low has been easy money from global central banks. Today’s news did not change that. The Fed (and other central banks) are still printing billions of dollars everyday to boost stocks and help grow the economy.

Jim: Great. And finally, any new specific opportunities on your radar to keep an eye on?

Adam: Yes- I am seeing a lot of very strong action in the bank and housing stocks. Midas Wave subscribers will see a few new alerts emerge in the days ahead in these sectors if the healthy action continues.

Jim: Banks and housing being obvious beneficiaries of this ongoing loose money policy.

Adam: Exactly, the Fed has made it very clear that they want to support the banks and boost the housing market. Both are critical components to a healthy economy.

Jim: Adam, thank you for your time!

Adam: My pleasure….

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