There was little new from the FOMC statement, but key passage of from Ben Bernanke is the acknowledgement that “The Committee sees the downside risks to the outlook for the economy and the labor market as having diminished since the fall.” This softens the downside risks the Fed warned about at the last meeting and reflects modestly improved confidence in the economic outlook.
Similarly, the labor assessment was subtly improved. It should be noted that QE3 began last October, so when combined with the moderation in downside risks the statement clearly hints that a tapering could be forthcoming over the next several months. Moreover, the Fed is not troubled by recent low inflation readings, as they partially reflect “transitory influences”.
It's no secret that this year has been a volatile one for the markets. The S&P 500 is down 18% year to date, while the Nasdaq Composite is off by 27% year to date. Meanwhile, the VIX, a key measure of volatility, is up 49% year to date at 24.72. However, it has spiked as Read More