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Why isn't Wall Street cheering the Fed?

The Federal Reserve just modestly upgraded its assessment of the economy and Wall Street should be cheering.

The market's initial reaction was a touch of softness, however, the Fed's decision to continue tapering its asset purchases and maintain easy money after that, both reinforces an improving outlook, today's GDP report notwithstanding, and provides a cushion should certain sectors of the economy need additional help.

Janet Yellen, chair of the Federal Reserve, speaks at The Economic Club of New York on April 16, 2014.
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Janet Yellen, chair of the Federal Reserve, speaks at The Economic Club of New York on April 16, 2014.

The Fed's decision also seems to underscore the fact that the 0.1-percent growth in first-quarter GDP was largely restrained by the nasty winter weather that was quite disruptive to normal economic activity, from auto sales to home sales.

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However, I happen to believe that if housing fails to spring back to life in the selling season, the Fed, however high the hurdles are to "tapering the tapering" may be forced to pause in its effort to slow quantitative easing.

Without housing as an important leg of the next move up, the Fed may very well have to re-lay the foundation for accelerating growth in the quarters ahead.

That said, today's ADP report might be more germaine to the Fed's agenda, as growth in jobs was above market expectations, which could augur well, not only for Friday's official employment report, but also for the Fed's stated goal of getting much closer to full employment.

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Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. He also delivers a daily podcast, "Insana Insights," and a long-form weekly version, both available on iTunes and at roninsana.com. Follow him on Twitter @rinsana.

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