Courtesy of Mish.
The reaction to the FOMC no tapering news was a simple one "Party on dudes, in anything and everything, and in a big way."
For some intraday 5-minute charts of the US dollar, gold, the HUI, treasuries, and the S&P 500 stock market index please see So, It's No Tapering After All; Reaction is Telling.
How long this party lingers on will be interesting to see. Even though most market observers felt there would be some sort of minimal taper announcement today, is it really that relevant the Fed decided to keep asset purchases at $85 billion rather than $75 billion or $65 billion?
The one-day reaction says yes. And that is another indication of just how addicted to stimulus this market is. It is also an indication of something bigger (which possibly explains the reaction).
Until proven otherwise, the Fed is on a QE-to-Eternity mission. It wants to drive down interest rates until it believes in a recovery.
The $64 Trillion Question
The $64 trillion dollar question ($64 million buys nothing, and $64 Billion hardly anything at all) is "Then what?".
How and the hell is the Fed going to normalize interest rates with a recovery in full bloom, and interest rates three or full percentages points below normal?
I believe the answer is simple "It isn't". And if that is indeed the case, what was that huge selloff in gold all about in the first place?
10 Burning Questions for Bernanke
Bloomberg writer Caroline Baum has Ten Burning Questions for Bernanke (written ahead of the announcement). The first of which is a series of questions similar to what I asked above.
I generally spend Federal Reserve Chairman Ben Bernanke's post-meeting press conference hoping one of the reporters will ask what for me are the burning questions of the day. Since they never do, and in all likelihood won't later today, I'm going to ask them myself. Here goes.
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