Thursday, 3 October 2013

Stocks And The Fed: Why I'm Staying In Cash

By Eric Parnell

But a closer review of the leading drivers of recent stock performance raises eyebrows. For example, two of the biggest percentage gaining days in stocks over the last several weeks came when Larry Summers withdrew his name from consideration for Chairman of the Federal Reserve and when current Chairman Bernanke announced that the Fed would not be scaling back on asset purchases associated with its QE3 stimulus program. These were not moves in response to an improvement in the U.S. economic outlook or the potential robustness of the upcoming quarterly earnings season from the likes of a Google (GOOG), Apple (AAPL) or General Electric (GE). Instead, these were reactions to spontaneous human decisions tied to a policy making body in the Fed that now has an overwhelmingly large influence on capital markets on any given trading day. Such are conditions representative of a market that remains built on sand.

Read the full article here.

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