The Fed Has Spoken

The Federal Reserve Board has spoken by issuing a statement after their most recent meeting. But what did they say? From a market perspective, they said nothing. Rates will stay the same. The economy is improving from the severe downturn, but consumer consumption is restrained. This will make the recovery weak. We knew all of this going into the meeting. So, the question is, what does this mean to the markets? In reality, the markets hate surprises, so when the Fed does not give us any surprises, this is a good thing. This is true even when the news is bad. In this case the news was neutral.

If we look a bit deeper, we see that the Fed is moving into a balancing act stage. They must start to remove the stimulus from the equation before things get out of hand. But the economy and psyche of the markets is not strong enough to withstand even the news of such. Therefore, the Fed announced that they will continue purchases of mortgage-backed securities and Treasuries into the first quarter even though they were scheduled to end by the end of the year. This gives the Fed the flexibility to wind down purchases without making an announcement that the program is over. Recoveries are more about psychology than economics. If the markets feel good and the consumer feels good, recoveries become stronger. The markets have felt good for several months now as we have witnessed a strong stock rally without upsetting the bond markets. But we still have not succeeded in making the consumer feel good and the Fed recognizes that. Expect the tightrope to continue and any tightening language by the Fed to be introduced very slowly.

Best Regards,

 

Kurt Galitski

The Kurt Real Estate Group

Weichman Realtors

714-957-6677

Posted via email from The Kurt Real Estate Group

Kurt Galitski

Meet Kurt Galitski - The Kurt Real Estate Group, your new best friend. Distinctive Strategies that Deliver Record-Setting Results. When you combine Kurt’s passion and knowledge of the real estate market, you really gain an appreciation for what makes Kurt different. But what truly sets him apart from the crowd are his 5 distinctive strategies and his property management… For Kurt, getting into real estate was not an accident, it was a deliberate and calculated decision to deliver a better experience to home buyers, sellers, and landlords that they have ever received before. Today, you could ask any one of hundreds of clients, read his Yelp reviews, or look at his track record of being featured in Orange Coast Magazine in excess of eight consecu­tive years and you too will say mission accomplished. www.KurtRealEstate.com www.KurtPropertyManagement.com 877-957-6677

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