IIFT Daily Note with Peter Brown

Fed tapers another $10 bln

Posted by:  |  Time: 7:59 am  |  Topic:
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It seems the FED has ignored all the turmoil on emerging markets and decided to go ahead with a further trimming of stimulus. The market did not take it too bad, S&P hitting a 1766 low. Dollar a little stronger. I thought it was Yellen but it was Ben Bernanke’s last stand. Either way we have a clear indication they want to withdraw QE as fast as possible. So we can pencil in a $10 bln reduction each month unless something dramatic happens.

How will the market react today. Possible we get a rally, have not had a decent rally from these levels yet. Emerging markets are known, tapering is done what more to push the downside? Risk is on a rally. Medium term I do not know, still feel low interest rates support stocks and we should find a floor soon, maybe today.

USD/JPY still holding above 102 and that is key. A break below will lead to another down leg in stocks.

Conditions today will be choppy

Levels are : Eur/Usd  1.3700  1.3600  1.3580  S&P (Mar) 1790 1782  1765   Wall St (DFB) 15850  15710

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